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Please read carefully the important disclosures at the end of this publication.
Regional markets, The reasons for the strong performance by regional markets are manifold, including 1)
particularly TIPs, receding fears of a double dip in the developed countries, 2) global funds’ reallocation
performed well in 2010 of funds to emerging markets, 3) stronger-than-expected economic growth in Asia,
and 4) continued earnings upgrades by equity analysts. Malaysia’s respectable
performance in 2010 got a helping hand from domestic factors such as the
government’s numerous transformation efforts including the Economic Transformation
Programme (ETP), the New Economic Model (NEM) and the 10th Malaysia Plan
(10MP). We started the year with a KLCI target of 1,450 points, which we raised to
1,500 points after the 2Q results season in Aug. It appears that the KLCI is likely to
again beat our revised target. Foreign funds turned significant net buyers of Malaysia
in Jun. Jul’s inflow of US$308m was, in fact, the highest since Sep 07.
1000
500
0
3/31/1995
3/31/1996
3/31/1997
3/31/1998
3/31/1999
3/31/2000
3/31/2001
3/31/2002
3/31/2003
3/31/2004
3/31/2005
3/31/2006
3/31/2007
3/31/2008
3/31/2009
3/31/2010
-500
-1000
-1500
Figure 4: Qoq change in our KLCI universe’s earnings estimates post results seasons
3.0% 2.7%
CY10 CY11 2.1%
1.8% 1.9%
2.0%
1.6% 1.5%
1.1% 1.0%
1.0%
0.0%
-1.0%
End Feb 2010 End May 2010 End Aug 2010 End Nov 2010
2.00
1.80
Positive momentum for market
1.60
1.40
1.20
1.00
0.80
0.60 Negative momentum for market
0.40
0.20
0.00
3Q03 1Q04 3Q04 1Q05 3Q05 1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10
1500
13/05 -BNM raised the OPR by
25bps to 2.5% . 23/11 -Korea tension
1450
1400
19/10-23/10 -61st UMNO
21/06 -China loosens currency grip
26/01-Obama To Propose 3 Year Spending General assembly
Freeze On Many Programs
1350
04/02- Greece Crisis 21/09 -Economic Transformation
Programme Open Day
1300
08/07 -BNM raised the OPR by
30/03-New Economic Model 25bps to 2.75% .
(NEM) announcement 10/06-PM announced 10th M'sian Plan
1250
19/05 -Germany prohibits naked short
18/02-Fed raises discount rate from selling on Government bonds and some
0.50% to 0.75% shares.
1200
1/1/2010 1/31/2010 3/2/2010 4/1/2010 5/1/2010 5/31/2010 6/30/2010 7/30/2010 8/29/2010 9/28/2010 10/28/2010 11/27/2010
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Feb-07 Feb-08 Feb-09 Feb-10
27.0%
26.0%
25.0%
24.0%
23.0%
22.0%
21.0%
20.0%
Jan 07 May 07 Sep 07 Jan 08 May 08 Sep 08 Jan 09 May 09 Sep 09 Jan 10 May 10 Sep 10
Pre-elections period is Besides Sarawak and general elections, Umno party elections were originally slated to
normally good for the be in 2011. However, party elections have been delayed by up to 18 months and will
market be held shortly after general elections. Regardless of the type of election, they augur
well for the stockmarket as the period leading up to elections is typically investor-
friendly. We expect pump-priming efforts to ratchet up in 2011, negative policies to be
kept to a minimum and speculative activities to pick up steam. In the previous
elections, the KLCI gained 5% in the 12 months before the elections were held and
surged 17% thereafter. The impact of Umno party elections on the market is even
more significant. In the past nine occasions, the market rallied an average of 30%
during the 12 months leading up to Umno party elections. On the other hand, the KLCI
fell an average of 7% in the 12 months after party elections. The clear signal from the
market’s performance pre and post Umno party elections is to buy ahead of the
elections and sell shortly after it. For general elections, the results must be favourable
to the incumbent for the market to rally after the polling date. In the case of the 2008
elections, the KLCI plunged 100 points the first trading day after elections and circuit
breakers kicked in for the first time ever.
800
600 UMNO
9-Oct-96
UMNO
400 UMNO UMNO UMNO 26-Mar-09
4-Nov -93 11-May -00 23-Sep-04
200
1/2/1990 1/2/1992 1/2/1994 1/2/1996 1/2/1998 1/2/2000 1/2/2002 1/2/2004 1/2/2006 1/2/2008 1/2/2010
Figure 16: KLCI performance before and after Umno party elections
12 m ths 9 m ths 6 m ths 3 m ths 3 m ths 6 m ths 9 m ths 12 m ths
before UE before UE before UE before UE after UE after UE after UE after UE
1981 90.9% 61.1% 46.7% 20.0% -37.7% -29.7% -42.8% -46.4%
1984 1.1% -8.0% 2.1% -6.7% -8.5% -20.7% -21.1% -21.0%
1987 105.4% 77.0% 43.0% 32.7% 22.7% -15.9% -21.7% -14.7%
1990 -8.6% -23.0% -20.1% -12.4% 21.0% 36.6% 17.4% 14.5%
1993 49.6% 52.8% 36.2% 26.6% 17.7% 6.6% 10.4% 9.1%
1996 16.0% 8.2% 0.6% 1.0% 8.6% 1.9% -7.3% -26.7%
2000 30.4% 34.7% 26.3% -7.7% -12.2% -18.3% -21.3% -37.7%
2004 15.5% 10.0% -6.2% 4.2% 5.9% 3.0% 5.9% 8.2%
2009 -28.0% -26.8% -13.6% 1.8% 21.3% 37.5% 42.7% 48.2%
Average 30.3% 20.7% 12.8% 6.6% 4.3% 0.1% -4.2% -7.4%
Avg excluding 2009 37.5% 26.6% 16.1% 7.2% 2.2% -4.5% -10.0% -14.3%
Source: www.UMNO-online.com, www.spr.gov.my, CIMB Research
0 10 20 30 40 50 60 70 80 90 100
Year (%)
12 Total v otes polled (m) Eligible v oters (m) 80.0
Voter turnout (%) (RHS)
10 78.0
8 76.0
6 74.0
4 72.0
2 70.0
0 68.0
59 64 69 74 78 82 86 90 95 99 04 08
The Malaysian economy is firmly on the recovery path. After a spectacular rebound in
2010, the economy will move a notch down to a more sustainable growth pace. We
are looking at GDP growth of 5.5% for 2011 and 6.5% for 2012 compared to an
estimated 7.0% for 2010. Growth in 2011 will come from the continued expansion of
domestic demand amid export headwinds. Private investment, which staged a
meaningful recovery in 2010, remains a wild card.
Figure 22: Malaysia’s leading index points to growth, albeit at a more moderate pace
% Annualised real GDP growth Leading index - 6-mth smoothed growth rate
25
20
15
10
5
0
-5
-10
Jan-01 Nov-01 Sep-02 Jul-03 May-04 Mar-05 Jan-06 Nov-06 Sep-07 Jul-08 May-09 Mar-10
Source: BNM, Department of Statistics (DOS)
No double dip for global We continue to expect a two-tiered global recovery and do not believe that the world
economy economy is heading for a double-dip recession. Major advanced economies continue
to face headwinds given the multi-year deleveraging process. Although growth of
developing Asia is moderating, the growth prospects are still good. Global lead
indicators continue to head south, adding to the evidence that global growth has lost
momentum though the pace of deceleration differs between mature economies and
developing ones. Taking no chances on the risk of a faltering recovery, the Fed and
Bank of Japan have activated asset purchases or quantitative easing programmes to
bolster their anaemic economic recovery.
Gradual fiscal rollback to As external risks persist, fiscal rollback will be gradual to avoid choking off the
avoid choking off the recovery. As such, total expenditure is budgeted to rise 2.8% to RM212.0bn in 2011
recovery (RM206.2bn in 2010), with the increase coming entirely from operating expenditure
(+7.0% to RM162.8bn). Development expenditure is set to decline 9.0% to RM49.2bn
in 2011 (RM54.0bn in 2010), reflecting the lapsing of the fiscal stimulus package. This
will translate into a marginal rise of 0.6% in public investment compared with an
estimated 8.7% in 2010. The federal government’s budget deficit is expected to be
reduced marginally to 5.4% of GDP for 2011 from 5.6% of GDP in 2010.
To realise government initiatives, substantial amounts of money will be provided,
namely RM9.5bn under the National Key Result Areas (NKRA), RM6.0bn for the 12
National Key Economic Areas (NKEA), RM22.0bn for the completion of 9MP projects
and RM12.4bn for new projects under the Tenth Malaysia Plan (10MP).
45
30
15
-15
-30
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010E 2011F 2012F
Source: BNM, CIMB Research
All economic sectors are projected to register positive growth rates. The challenge is
to sustain private sector demand as the export engine may stall given the ongoing
headwinds in the major economies. The services sector is envisaged to grow 6.0% in
2011 (6.5% in 2010), supported by the continuing expansion of domestic consumption
and trade-related activities. The manufacturing sector is projected to expand 6.0%
(11.4% in 2010), in line with the moderating pace of export growth. Growth of the
construction sector is estimated to kick up a notch to 5.6% in 2011 (4.6% in 2010),
supported by the acceleration of ongoing projects such as KLIA 2, the second Penang
Bridge, SKVE (Package 3), highways, power plant, and the LRT extensions.
No interest rate hike After three interest rate increases since Mar 2010, Bank Negara Malaysia (BNM) kept
until 2H11 its overnight policy rate (OPR) at 2.75% during two consecutive policy meetings as it
considers the current monetary policy stance to be appropriate in ensuring sustained
economic recovery. We think BNM is choosing to err on the side of boosting growth
rather than aggressively managing inflation expectations given the increasing
downside risks to growth. External headwinds have already caused a pullback in
exports and industrial output in recent months. Inflationary pressures are likely to
persist but are not a threat due to sustained domestic demand, firm commodity prices
and high food prices. Continued rationalisation of subsidies could add to the inflation
upside. We estimate inflation to rise modestly to 3.0% in 2011 from an estimated 1.7%
in 2010. As such, we expect the central bank to start normalising interest rates in
2H11 and we project a policy rate of 3.25% by end-2011 (2.75% in 2010).
We concur with BNM’s view that hefty capital inflows into emerging markets are the
key challenge. We expect the central bank to stay on guard against volatile short-term
capital flows to ensure that the flows do not pose a systemic risk to macroeconomic
and financial stability. On this note, we think BNM will be ready to act if volatile capital
flows threaten to destabilise the financial system. If the liquidity build-up leads to the
risk of fuelling excessive credit growth, BNM may raise the statutory reserve
requirement (SRR) ratio of 1% currently to curtail credit creation.
9 3.5
6 3.0
3 2.5
0 2.0
-3 1.5
-6 1.0
Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10
Political risks
2008 general election Political noise may have subsided this year but could easily rachet up should snap
has changed the political general elections be called. Elections in Malaysia are typically hotly contested and the
landscape stakes have never been higher. Sarawak state elections have to be called by Jul 2011
while general elections are not due till 2Q13. We note that the Opposition won eight
out of the last 13 by-elections.
Policy risks
Policy flip-flops Although the Najib administration has promised to avoid the policy flip-flops that
marred the Abdullah Badawi administration, imposition of unpopular policies would
draw similar reactions. The 2010 Budget re-imposition of the real property gains tax of
just 5% met with hue and cry. Likewise, the award of the sports betting licence in 2010
and its subsequent cancellation caused confusion and reinforced the perception that
there is still a tendency for policy flip-flops.
Execution risks
Execution in Malaysia Malaysia is well known for coming out with strong proposals and positive policy
has been wanting measures. However, it is also well known for its poor execution and implementation
skills. The question repeatedly asked in relation to the ETP is the authorities’ ability to
deliver what they promise. We are comforted that the various transformation proposals
have step-by-step procedures that will greatly assist in implementation. KPI targets are
also being tracked closely.
Figure 27: FBM KLCI’s 12M forward core P/E (x) and standard deviation
24.0
22.0
FBMKLCI's actual PER, now at 14.4x 12M forward
20.0 +3 S.D.
18.0
+2 S.D.
P/E (x)
16.0
14.0 +1 S.D.
12.0
-1 S.D.
10.0 -2 S.D.
KLCI target basis is not We could also apply the 3-year moving average P/E of 15x, which is where the mid-
aggressive cycle P/E is. This is not an aggressive target as valuations could stretch to as high as
18-19x towards the later part of the market cycle. On a P/BV basis, however,
valuations are slightly above the mid-cycle P/BV of 2.2x though still below the late-
stage peak of around 2.8x. Should EPS be revised upwards over the course of 2011
as it was throughout 2010, P/E valuations would be even more attractive, providing
further upside to the KLCI target.
19
18
17
2.9
2.7
2.5
Current P/BV
2.3
2.1 Mid-cycle
1.9
1.7
1.5
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 59
Months of upcycle
Source: CIMB estimates
Malaysia’s bull run still Bull markets in Malaysia lasted on average 26 months. This bull market started in
has legs earnest in Apr 09, i.e. 20 months ago. Assuming it peaks in the 26th month, that means
that 1H11 will be robust and the time to take profits will be mid-year. However, bull
markets can last much longer than 26 months. The longest was double that at 52
months. The average bull market enjoyed gains of 133%. So far, this bull market is up
less than 100% from its trough. Given that the trough was hit during unusual
circumstances, i.e. the global financial crisis, the rebound should be stronger. Recall
that during the Asian financial crisis, the KLCI surged 235% from trough to peak.
Malaysia’s premiums Malaysia’s valuations remain at a premium over its regional peers. But the premium
have narrowed has narrowed in view of Thailand’s and Indonesia’s massive rallies this year. The P/E
premium used to range between 15% and 20% but has narrowed to 10-12%.
Malaysia’s dividend yield is one of the most attractive in the region at around 5%. We
forecast ROEs to remain above 15% and net gearing to decline to 4% by 2012. This is
a vast improvement on 2003 when net gearing was 65%.
Sectors to overweight
Buy cyclical sectors In view of the improving economic outlook, imminent call to the polls, ETP, 10MP and
and GLCs 2011 Budget, cyclical sectors are likely to benefit most from a more buoyant
environment. The potential approval of the RM36bn-40bn, RM10bn-12bn high-speed
rail, numerous new highways and transformation of Greater Kuala Lumpur/Klang
Valley into an outstanding global city will be hugely positive for contractors and
developers, particularly those in the Klang Valley. Banks will also gain from new bonds
issuance and corporate loans for these projects. Other cyclical sectors that we favour
include oil & gas service providers as steadily rising commodity prices facilitate the
development of the sector. The auto sector should register another record year in
2011 as consumer confidence feeds the propensity to spend. Last but not least, the
GLCs are an important category to invest in as they should benefit from the various
transformation programmes or at least there is the perception that they will benefit
from government largesse.
Source: Pemudah
Strengthening consumer Propelled by new model launches, favourable credit conditions, and rising income
sentiment to boost auto levels, 2011 looks set to be another good year for the auto industry. In addition,
sales consumer sentiment, which is arguably the most important driver of big-ticket items
such as cars, is holding up well. We are projecting vehicle sales growth of 5% for
2011, pushing vehicle sales past the 600,000 mark to 619,070 units, from an
estimated 590,955 units in 2010. Our TIV growth projection implies an auto sales to
real GDP growth multiplier of only 0.9x, which is still below the historical range of 1.2-
3.0x. We remain OVERWEIGHT on the auto sector. Factors that could catalyse it
include 1) strong vehicle sales, 2) a firming ringgit, and 3) more accommodative auto
policies such as the lowering of excise duties. Tan Chong is our top pick in the sector.
Banking sector to chart 16% The banking sector remains an OVERWEIGHT, underpinned by the favourable
EPS growth in 2011 earnings outlook for 2011. We are projecting solid net earnings growth of 16.3% in
2011, driven by (1) healthy loan growth of 8-9%, (2) stable credit costs in anticipation
of stable or even improved asset quality, and (3) improved fee income from the
investment banking and SME segments. The potential re-rating catalysts for the sector
include (1) strong earnings growth, (2) sustained activities in capital markets to fuel
investment banking income, (3) better traction for overseas operations, (4) potential
GP write-backs, and (5) upside potential to dividend forecasts given the less-stringent-
than-expected Basel III capital requirements. RHB Capital is our top pick for the
sector.
ETP pump-priming should We remain positive on the contruction sector in 2011 and are encouraged by the
start in 2011 progress of the RM36bn-40bn KL MRT, RM7bn LRT extension/upgrade and other
outstanding jobs under 10MP which are at various stages of tender/proposal
evaluations. This suggests that project awards are likely to dominate newsflow in the
next 6-9 months, backed by the deliverables of the Economic Transformation Plan.
The potential approval of the RM10bn-12bn high-speed rail project is another boon to
the sector. We remain OVERWEIGHT on the construction sector which remains
anchored by the public transportation upgrade theme. Gamuda and WCT remain our
top picks and MRCB makes a re-entry as one of our GLC/construction plays.
A slew of new incentives Petronas is expected to announce more incentives for the oil & gas sector as the
from Petronas government sets the stage for Malaysia to become a regional hub for oilfield services
and attract more foreign investments. This follows the launch of Schlumberger's
financial hub in Nov, which marked the first step in the ETP's goal to draw MNCs into
setting up regional headquarters in the country. Also, the government is working
closely with Petronas to outline plans for industry players to optimise the country's oil
output, providing a boost to the sector by developing greater skills and creating
employment in value-added activities. We expect the service providers to benefit from
the incentives and the availability of more international expertise in the country.
Already the proposed development of marginal fields has generated buzz among the
service providers as Petronas is bringing the focus back on domestic fields. We
remain OVERWEIGHT on the sector and SapuraCrest stays as our top pick.
Strong sales, M&A and With IFRIC 15 and the loan-to-value ratio cap out of the way, we do not foresee any
landbanking to re-rate more regulatory concerns for the sector until perhaps the general elections are held.
sector Many developers have chalked up record sales in 2010 and continued buoyant
demand should keep earnings growth strong over the next 2-3 years. Affordability is
close to its best-ever level and the various infrastructure projects including MRT and
high-speed rail bode well for the sector. The pick-up in M&A activity could also boost
interest in property stocks, particularly after the groundbreaking proposal to merge
UEM Land and Sunrise. Newsflow is likely to remain strong as landbanking activities
are also gaining traction. The sector remains an OVERWEIGHT, with Outperform calls
for all property developers. SP Setia remains our top pick.
GLCs are mostly large and Being relatively large and liquid, most GLCs sit well with foreign investors. There are
liquid and popular with numerous GLCs spread across many sectors. In the banking sector, our GLC picks
foreign funds include RHB Cap, Maybank and Affin. In the construction and property space, MRCB
straddles both with significant exposure to infrastructure, construction and property
development. UEM Land’s (ULHB MK; Not Rated) proposed merger with Sunrise
(SUN MK; Not Rated) will enhance the group’s credibility and may make it too big to
ignore. In the auto sector, we like UMW and Proton while in the oil & gas sector, we
like Petronas Dagangan. For other cyclical sectors, our picks include Sime Darby for
plantations, MAS for airlines and Star for media. In the stable mature sectors, we like
Axiata and TM for telcos, Malaysia Airports for transport infrastructure and Tenaga for
utilities.
Gamuda is a direct Gamuda – We are encouraged by the progress of the proposed KL MRT, which is
beneficiary of the MRT now slated to start work in Jul 2011. This suggests that project approval, tender
project process and project awards are likely to come through within the next 2-6 months. A
major milestone would be Cabinet approval which should occur by end-2010. This is
positive for Gamuda as it has a good chance of bagging the RM12bn-14bn tunnelling
works. We estimate a 6-10% enhancement to FY11-12 earnings and 3-9% boost to
our target price if the group succeeds in clinching the job. We maintain our Outperform
call and RNAV-based target price of RM4.96. The main re-rating catalyst is progress
and award of the MRT project. Gamuda is one of our top construction picks.
Kencana is an O&G stock Kencana benefited from a steady flow of projects in Malaysia, Vietnam, India and
with strong newsflow Australia in 2010, landing 13 jobs worth RM1bn which took its order book to RM2.1bn.
Being one of the bigger, most efficient fabricators, Kencana is poised to secure more
contracts. We expect the company to continue to clinch new projects over the next few
months and stay a contract headliner as it is vying for works worth RM5.2bn in
Malaysia and at least US$300m in India. It is also gunning for contracts to develop the
Sepat and Berantai marginal fields, which could transform the company into an oilfield
developer and producer.
MAS is top airline pick in MAS – We continue to rate MAS an Outperform as it is turning into a more aggressive
Malaysia growth-oriented company. Over the next three years, the airline will be taking delivery
of the majority of the 56 aircraft it has ordered. They include new-generation narrow-
and wide-body planes like the B737-800, A330 and A380 that will fundamentally lower
its structural costs and increase the attractiveness of its cabin offerings to passengers.
After years of an incoherent response to the low-cost threat, MAS recently started a
separately managed low-cost business under Firefly with the intention of regaining
some of the 50%+ market share lost to its low-cost rival over the past seven years.
Also, MAS’s extremely expensive fuel hedges carried over from pre-crisis days will
finally expire at the end of 2011, potentially leading to a substantial earnings uplift in
2012.
MRCB is a dual MRCB makes an entry as one of our top picks for 2011 for a construction, property
construction and property and GLC play. We think that newsflow is likely to pick in 2011 on the much talked-
GLC play about 3,300-acre Sg Buloh Land as the government rolls out the ETP. MRCB is likely
to emerge as one of the key beneficiaries and participate both as a turnkey contractor
and a developer. Newsflow on details of the merger with IJM Land is another re-rating
catalyst for the stock. We reiterate our TRADING BUY recommendation and target
price of RM2.76, which is based on an unchanged 10% RNAV discount.
RHB is top banking RHB Capital is an Outperform and our top pick for the banking sector with a target
sector pick price of RM10.50. We see numerous catalysts for the group including (1) robust
investment banking income supported by robust deal flow, (2) brisk loan growth in the
mid-teens, driven primarily by consumer loans and lending to public sector, and (3)
network expansion via its innovative EASY outlets and tie-ups with big corporates for
faster new customer acquisition. We project net earnings growth of 15-17% for FY11-
12. The acquisition of Bank Mestika, which will be completed by 1Q11, will help the
group to establish a foothold in the underpenetrated and fast-growing market in
Indonesia.
Sime is Malaysia’s Sime Darby – We like Sime Darby as it is a liquid and cheap proxy for rising CPO
largest planter prices. In 2011, we expect the new CEO’s efforts to turn around the group and rising
CPO price to prevail over worries about the huge losses at its energy & utilities
division in the previous year. There is potential for recovery of some of the provisions if
the group is successful in claiming part of the cost overruns and divesting its
groundwater project. Sale of non-core assets could lead to earnings upside for Sime
from potential gains on the sale and reduced overheads though we do not expect it to
be substantial. Its foreign shareholding level has fallen close to its all-time low of 13%
from a high of 21%. Factors that could catalyse the stock include higher CPO price,
favourable newsflow on key management changes, sale of non-core assets and the
potential listing of individual business divisions.
WCT is Malaysia’s top WCT’s latest RM1.4bn project win in Qatar and the integrated complex concession at
subcontractor the new LCCT raised the group's profile as the biggest beneficiary of mega jobs in the
Middle East and open tender jobs locally. The group still has a strong chance of
bagging more projects in the next six months, with potential contract awards in 2011
matching the RM2bn secured in 2010. WCT’s share price performance has lagged
behind IJM’s and Gamuda’s, creating a buying opportunity. The stock remains an
Outperform with an unchanged target price of RM4.21, pegged to a 10% discount to
its RNAV. WCT is one of our top picks for the construction sector.
MALAYSIA
OVERWEIGHT Maintained
Autos
A good cyclical play
Figure 1: Total industry volume (units) Figure 2: Market share (Jan-Oct 2010)
units Hy undai
700,000 Others
1.6% Perodua
600,000 Nissan 12.9%
5.8% 31.1%
500,000
400,000 Honda
300,000 7.5%
200,000
100,000
0 Toy ota Proton
15.0% 26.4%
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010F
2011F
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Proton PROH MK TB 4.84 5.95 845 6.8 6.4 23.4 0.4 6.8 2.1
Tan Chong TCM MK O 5.44 9.15 1,162 10.7 7.7 45.9 1.8 18.4 2.4
UMW UMWH MK O 6.91 8.85 2,530 10.5 10.0 25.8 1.7 17.2 6.4
Simple average 9.3 8.0 31.7 1.3 14.1 3.6
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Banks
Slower but healthy growth
Figure 1: Banking system’s loan base and yoy growth Figure 2: Banking system’s NPL ratio & loan loss coverage
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Affin AHB MK O 3.20 4.04 1,520 8.8 8.0 17.1 0.9 10.2 3.8
Alliance AFG MK U 3.08 3.11 1,515 10.5 9.4 20.2 1.4 13.8 4.2
AMMB Hldgs AMM MK O 6.26 8.20 5,996 11.2 9.8 24.9 1.6 15.0 4.2
Malayan Banking MAY MK O 8.41 10.50 18,916 12.4 11.0 14.5 2.0 16.4 7.5
Public Bank PBK MK O 12.80 16.10 14,367 12.8 10.9 19.3 3.0 25.1 5.7
RHB Cap RHBC MK O 8.59 10.50 5,878 10.9 9.5 17.6 1.7 16.6 3.7
Simple average 11.3 10.1 22.1 1.9 17.1 4.6
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
NEUTRAL Maintained
Brewers
Not the choice brew
Figure 1: Total industry volume (‘000 hectolitre) Figure 2: Duty structure and trend
RM/HL
1500 1000
1250
800
1000
600
750
400
500
200
250
0 0
Australia
Hong
Indonesia
Vietnam
Japan
Singapore
Korea
Thailand
China
Philippines
Malaysia
New
Norway
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010F
2011F
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Carlsberg Brewery CAB MK N 6.05 6.70 592 13.0 12.1 25.9 3.0 23.9 6.1
Guinness Anchor GUIN MK N 9.96 10.45 956 17.3 16.7 6.2 5.9 35.1 6.6
Simple average 15.2 14.4 16.1 4.5 29.5 6.4
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
NEUTRAL Maintained
Building Materials
If you build it, they will come
Figure 1: Malaysia cement production (‘000 mt) Figure 2: East Asia import steel prices, CFR (US$ / mt)
2,000
Semi / billets Long / rebar
1000 Flat HRC Flat CRC
1,500 900
800
1,000
700
600
500
500
0 400
Jan
Sep
Jul
Mar
Jan-08
Sep-08
Jan-09
Sep-09
Jan-10
Sep-10
May
Nov
May-08
May-09
May-10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Ann Joo AJR MK TB 2.94 3.74 490 9.7 6.8 92.2 1.4 15.3 5.8
Lafarge M Cement LMC MK U 7.40 6.37 2,004 14.4 13.7 3.5 1.9 13.3 5.7
Tasek TC MK O 7.59 9.00 299 9.6 9.2 31.4 1.0 14.3 1.6
Simple average 11.2 9.9 42.4 1.4 14.3 4.4
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Construction
Mega jobs make tracks
Figure 1: Construction sector’s real GDP growth (%) Figure 2: Major 10MP projects
12.0 Key projects Value Status
(RM bn)
10.0
KL MRT 36-40 Appointed project manager
8.0
LRT Ex tension/upgrade Klang Valle 7 Aw arded Phase 1
6.0
Sev en new highw ay s 19 Approv ed in 10MP
4.0 High Speed Rail (HSR) 10-12 Feasibility study
2.0 Total 74.0
0.0
1Q01
4Q01
3Q02
2Q03
1Q04
4Q04
3Q05
2Q06
1Q07
4Q07
3Q08
2Q09
1Q10
-2.0
-4.0
-6.0
-8.0
Construction sector growth % yoy GDP growth % yoy
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
IJM Corp IJM MK O 6.14 6.95 2,644 21.3 20.2 32.6 3.5 16.4 1.7
Gamuda GAM MK O 3.76 5.00 2,451 19.6 15.2 33.8 3.6 19.2 3.2
MRCB MRC MK TB 2.01 2.53 885 41.3 34.1 15.6 3.3 8.3 0.5
Muhibbah MUHI MK TB 1.36 2.06 173 10.3 9.0 59.0 0.9 8.8 2.2
MTD ACPI ACP MK U 0.51 0.32 38 30.5 11.5 181.4 0.7 2.4 1.8
WCT WCT MK O 3.00 4.34 752 13.0 12.5 10.8 1.8 15.0 3.3
Mudajaya MDJ MK O 3.94 7.94 523 5.6 5.1 67.1 1.8 36.7 1.5
Simple average 20.2 15.4 57.2 2.2 15.3 2.0
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
UNDERWEIGHT Maintained
Food & Beverages
Not that tantalising
Figure 1: Milk solid price (US$ / pound) Figure 2: CPI for food & non-alcoholic beverage (% yoy)
0.25 2.5
0.20 2.0
0.15 1.5
0.10 1.0
0.05 0.5
0.00 0.0
Jan-08 Aug-08 Mar-09 Oct-09 May -10 Dec-10 Jan-10 Apr-10 Jul-10 Oct-10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
CI Hldgs CIH MK B 3.68 5.15 166 12.2 10.9 11.5 4.4 36.3 3.3
Cocoaland COLA MK N 2.34 3.26 128 9.7 9.1 17.2 2.1 23.2 5.1
F&N Hldgs FNH MK U 16.26 11.05 1,859 21.5 20.9 (1.1) 5.1 22.4 3.3
Nestle (M) NESZ MK U 43.50 38.85 3,252 22.3 21.3 10.8 11.8 57.3 4.7
QSR QSR MK N 5.63 6.50 521 12.9 12.1 13.6 3.5 27.2 2.7
Simple average 15.7 14.9 10.4 5.4 33.3 3.8
O = Outperform, B = Buy, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Gaming
Win some, lose some
Figure 1: Quarterly casino revenue trend (RM m) Figure 2: Quarterly NFO revenue trend (RM m)
Casino (LHS) grow th (%)
NFO (LHS) grow th (%)
1,400 25% 2,400 15%
1,300 20% 2,300 10%
15% 2,200
1,200 10% 5%
2,100
1,100 5% 0%
2,000
1,000 0%
1,900 -5%
-5%
900 -10% 1,800 -10%
800 -15% Mar- Jun- Sep- Dec- Mar- Jun- Sep- Dec- Mar- Jun-
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
08 08 08 08 09 09 09 09 10 10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
B Toto BST MK N 4.25 4.67 1,830 15.9 15.3 (0.6) 8.9 60.3 6.8
Genting GENT MK O 10.70 15.20 12,665 13.3 11.5 36.5 2.1 17.2 0.7
Genting Malaysia GENM MK N 3.34 3.90 6,298 14.1 12.9 3.4 1.6 11.9 2.4
RGB RGB MK U 0.06 0.06 22 13.5 7.9 162.1 0.7 5.5 0.0
Simple average 14.2 11.9 50.4 3.3 23.7 2.5
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Media
Sticking to papers
800
30%
20% 700
10%
600
0%
1997
1999
2001
2003
2005
2007
2009
500
-10%
-20% 400
Adex growth GDP growth
Jan-08 Jun-08 Nov-08 Apr-09 Sep-09 Feb-10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Media Prima MPR MK N 2.34 2.78 748 12.6 11.0 (7.5) 4.6 41.7 4.0
MCI MCIL MK O 0.88 1.52 472 9.1 8.5 10.7 1.1 12.2 5.7
Star Publications STAR MK O 3.39 4.52 798 12.9 10.9 16.8 2.2 17.6 6.2
Simple average 11.5 10.1 6.7 2.6 23.8 5.3
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Oil and Gas
Oiling growth
Figure 1: Oil production vs. consumption (‘000 bpd) Figure 2: Oil & gas reserves (m barrels of oil equivalent)
800 25
700 Crude oil & condensate Natural gas
20
600
Net production 15
500
400 10
300 5
200
0
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
1980 1984 1988 1992 1996 2000 2004 2008
Source: Petronas
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Dialog DLG MK U 1.60 1.15 1,014 22.6 20.1 12.4 4.2 20.0 2.5
Kencana KEPB MK O 2.01 2.40 1,063 14.1 12.2 18.6 10.2 78.6 1.5
Petra Perdana PETR MK TB 0.77 0.98 110 12.9 9.4 8.4 0.6 5.3 2.6
Petronas Dagangan PETD MK O 11.70 15.40 3,705 12.2 11.1 12.8 1.7 14.3 7.3
SapuraCrest SCRES MK O 2.82 3.30 1,148 13.4 12.4 19.5 3.8 28.9 3.2
Wah Seong WSC MK N 2.00 2.36 462 12.7 11.7 4.3 3.3 27.4 2.8
Simple average 14.7 13.0 12.7 4.0 29.1 3.3
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
TRADING BUY Maintained
Plantations
Another year of strong harvest
Figure 1: Historical CPO prices Figure 2: 8 Oils & fats stock/usage ratio projected to decline
RM per tonne Oct/Set 10/11F 09/10 08/09 07/08 06/07
4,000 Op stocks 16.4 16.1 15.1 14.0 14.0
Production 143.2 138.0 131.6 127.8 120.8
3,500
Imports 61.1 59.4 58.7 54.8 51.5
3,000 Ex ports 61.0 59.4 58.1 55.0 51.8
Consumption 143.9 137.7 131.3 126.5 120.5
2,500
Ending stocks 15.8 16.4 16.1 15.1 14.0
2,000 Stock/Usage ratio 11.0% 11.9% 12.2% 11.9% 11.6%
1,500
1,000
1-Jan-09 18-Jun-09 24-Nov -09 24-Mar-10 22-Jul-10 19-Nov -10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Sime Darby SIME MK TB 8.74 10.78 16,743 16.3 14.6 8.7 2.2 13.9 4.1
IOI Corp IOI MK N 5.78 6.54 12,336 17.8 15.9 15.2 2.9 18.0 3.8
KLK KLK MK TB 21.58 25.00 7,344 19.6 18.1 8.6 3.4 18.1 4.1
Genting Plantations GENP MK N 8.68 9.84 2,100 17.4 16.5 19.0 2.1 12.6 1.0
Hap Seng Plant HAPL MK TB 3.15 3.73 803 13.5 13.5 22.8 1.4 10.8 5.9
Simple average 16.9 15.7 14.9 2.4 14.7 3.8
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Power
A year of reforms?
Figure 1: Industry generation mix (FY8/10) Figure 2: Electricity demand by sector (Sep 08 – present) (Gwh)
Gwh Industrial Commercial Domestic
Gas -
Hy dro Oil & Distil. 4,000
Tenaga
Coal -IPP 5.1% 0.4% 3,500
22.4%
20.6% 3,000
2,500
2,000
Coal - 1,500
Gas - IPP
Tenaga 1,000
32.0%
19.6% Sep-08 Jan-09 May -09 Sep-09 Jan-10 May -10 Sep-10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Tenaga Nasional TNB MK TB 8.44 10.55 11,731 13.0 11.8 6.1 1.2 9.9 2.8
YTL Power YTLP MK O 2.44 2.97 5,652 13.8 13.1 13.1 2.3 17.1 7.2
Simple average 13.4 12.5 9.6 1.8 13.5 5.0
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Property
Piling on the newsflow
0.0000
0.0
1980 1984 1988 1992 1996 2000 2004 2008 1988 1991 1994 1997 2000 2003 2006 2009
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) RNAV CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2012 (Local) (%) CY2011 CY2011 CY2011
E&O EAST MK O 1.14 1.63 300 11.6 2.71 11.8 0.8 5.9 3.5
KLCC Property KLCC MK U 3.53 3.03 1,048 10.5 5.05 10.1 0.6 5.0 4.2
SP Setia SPSB MK O 5.24 6.88 1,694 14.6 5.73 25.1 2.2 13.0 4.5
Simple average 12.2 15.3 1.2 7.9 4.1
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Rubber Gloves
Nitrile has the upper hand
Figure 1: Nitrile and natural rubber price (RM/kg) Figure 2: Rubber and nitrile latex cost comparison (RM)
Rubber
15.0 Rubber latex Nitrile latex (For 1,000 gloves) Rubber latex Nitrile latex
vs. Nitrile
14.0 Average glove weight (kg) 5.00 3.50 -30%
13.0 Latex / nitrile content 73% 93% 20%
12.0 3.63 3.24 -11%
11.0
10.0
Total solid content 60% 44%
9.0
Weight of latex / nitrile (kg) 6.04 7.36 22%
8.0
7.0
6.0 Latex / nitrile price (RM/kg) 9.13 5.74 -37%
5.0
Total production cost 55.16 42.23 -23%
Jan-07
Mar-07
Jul-07
Sep-07
Jan-08
Mar-08
Jul-08
Sep-08
Jan-09
Mar-09
Jul-09
Sep-09
Jan-10
Mar-10
Jul-10
Sep-10
May-07
Nov-07
May-08
Nov-08
May-09
Nov-09
May-10
Nov-10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Adventa ADV MK O 2.13 3.79 104 7.1 5.7 26.9 1.0 15.0 3.0
Hartalega HART MK O 5.39 8.43 625 9.4 8.3 18.4 3.2 38.9 3.7
Kossan KRI MK O 3.34 5.41 340 7.4 6.3 12.5 1.8 27.6 3.0
Latexx LTX MK O 2.67 3.85 186 6.1 5.6 26.6 1.8 33.0 4.1
Supermax SUCB MK O 4.38 8.22 475 7.1 6.2 22.5 1.6 24.7 2.5
Top Glove TOPG MK O 5.55 7.27 1,094 12.0 11.1 9.7 2.5 22.4 3.4
Simple average 8.2 7.2 19.4 2.0 26.9 3.3
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Maintained
Semiconductor
Less chipper
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Unisem UNI MK O 1.96 2.82 421 6.5 5.7 41.3 1.1 18.0 6.8
MPI MPI MK O 5.45 6.90 365 9.8 7.4 16.1 1.3 14.1 6.7
Simple average 8.2 6.6 28.7 1.2 16.1 6.8
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
OVERWEIGHT Upgraded
Telecommunications
Busy signals for 2011
Figure 1: Voice revenue per minute Figure 2: Projection of revenue market share
27 45
Max is
25 40
23 Celcom
35
21
19 30
17 DiGi
25
15
20
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Axiata AXIATA MK O 4.67 5.90 12,572 12.8 11.9 35.8 1.8 14.5 2.4
DiGi.com DIGI MK N 24.80 27.00 6,147 14.8 13.3 13.2 16.9 114.1 6.7
Maxis MAXIS MK N 5.36 5.60 12,815 15.8 14.5 6.4 5.0 30.7 10.0
Telekom Malaysia T MK TB 3.41 4.04 3,889 46.6 34.0 (16.1) 1.9 9.2 7.6
Simple average 22.5 18.4 9.8 6.4 42.1 6.7
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
UNDERWEIGHT Maintained
Tobacco
It's getting tougher to smoke
Figure 1: Tobacco industry volume (‘bn sticks) Figure 2: Level of illicit trade (% market share)
May )
Source: Companies, CIMB Research
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
British American ROTH MK U 45.48 44.00 4,127 17.3 16.9 0.9 22.5 136.3 7.1
JTI RJR MK N 6.03 6.35 501 12.8 12.3 5.7 3.6 30.5 5.0
Simple average 15.1 14.6 3.3 13.1 83.4 6.1
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
NEUTRAL Maintained
Transport
Aviation to outperform shipping
Figure 1: Core net profit (RM m) Figure 2: Baltic Dirty Tanker Index
400
1,400
200 Baltic Dirty Tanker Index
1,200
0
-200 1,000
-400 AirAsia 800
-600 MAS
600
-800
400
-1,000
J FM AM J J A S O N D J FM AM J J A S O N
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
09 10
07 08 09 10
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
MAS MAS MK O 2.07 3.00 2,205 11.9 4.0 178.5 1.6 18.4 0.0
AirAsia AIRA MK O 2.61 3.85 2,306 7.4 5.4 38.4 1.3 17.7 0.0
MISC MISC MK U 8.75 7.00 12,451 25.4 22.6 19.4 1.7 6.5 5.3
Maybulk MBC MK U 2.97 2.80 947 13.9 9.3 19.8 1.5 11.2 5.5
Simple average 14.7 10.3 64.0 1.5 13.5 2.7
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
MALAYSIA
NEUTRAL Downgraded
Water
On a slow boat to consolidation
Figure 1: Demand and supply of water in Peninsular Malaysia Figure 2: Key water infrastructure projects (RM m)
2000 2020 2050 Value
Domestic 5,558 10,582 16,176 Kelau Dam & related w orks 2,500.0
Industrial 3,985 9,756 15,452 Langat 2 w ater treatment plant & related w orks 5,000.0
Irrigation 20,139 17,857 16,802 Sabah w ater supply project 2,000.0
Total demand (mld) 29,682 38,195 48,430 Mengkuang Dam (Penang) 1,200.0
Total supply (m ld) 11,917 20,300 n/a Total 10,700.0
Sector comparisons
Target Core 3-yr EPS P/BV ROE Div
Bloomberg Price price Mkt cap P/E (x) CAGR (x) (%) yield (%)
ticker Recom. (Local) (Local) (US$ m) CY2011 CY2012 (%) CY2011 CY2011 CY2011
Gamuda GAM MK O 3.76 5.00 2,451 19.6 15.2 33.8 3.6 19.2 3.2
IJM Corp IJM MK O 6.14 6.95 2,644 21.3 20.2 32.6 3.5 16.4 1.7
Puncak Niaga PNH MK N 2.54 2.89 333 4.2 3.2 32.3 0.5 12.7 5.3
Simple average 15.0 17.7 32.9 2.5 16.1 3.4
O = Outperform, N = Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: Company, CIMB Research
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Adventa Bhd RM2.13 @07/12/10
Surgical glove specialist Target: RM3.79
Rubber Gloves
Financial summary
FYE Oct 2008 2009 2010F 2011F 2012F
Revenue (RM m) 185.9 282.7 353.5 460.2 554.0
EBITDA (RM m) 23.0 45.0 52.0 62.8 77.4
EBITDA margins (%) 12.3% 15.9% 14.7% 13.7% 14.0%
Pretax profit (RM m) 13.5 18.6 36.9 47.0 61.7
Net profit (RM m) 13.8 17.2 34.0 43.3 56.8
EPS (sen) 9.0 11.2 22.3 28.3 37.2
EPS growth (%) (32.5%) 24.3% 98.3% 27.2% 31.3%
P/E (x) 23.6 19.0 9.6 7.5 5.7
Stock Information
Core EPS (sen) 9.0 18.2 22.3 28.3 37.2
Market cap: RM325m/US$104m Core EPS growth (%) (32.5%) 101.4% 22.4% 27.2% 31.3%
12-m price range: RM4.21 Core P/E (x) 23.6 11.7 9.6 7.5 5.7
RM2.10 Gross DPS (sen) 0.0 6.8 4.0 6.0 8.0
3-m avg daily vol: 0.3m Dividend yield (%) 0.0% 3.2% 1.9% 2.8% 3.8%
No. of shrs (m): 153 P/BV (x) 1.9 1.8 1.3 1.0 0.8
Est. free float (%): 49.8 ROE (%) 8.2% 9.3% 13.4% 13.3% 13.8%
Conv. secs (m): None Net gearing (%) 45.3% 41.6% 35.7% 31.6% 24.3%
Major shareholders (%): P/FCFE (x) 33.9 140.3 (21.5) (59.8) 19.1
- Low Chin Guan 39.7 EV/EBITDA (x) 17.6 9.0 8.0 6.9 5.5
- Koon Mei Wong 5.6 % change in EPS estimates N/A N/A N/A
- Lembaga Tabung Haji 4.9 CIMB/Consensus (x) 0.92 0.87 0.91
Source: Company, CIMB Research, Bloomberg
0.40
Today, Adventa is principally involved in the manufacture and trading of gloves and
2.9 0.30 medical supplies. The group now has the capacity to produce 500m surgical and
0.20
2.4
0.10
4.4bn pieces of examination & dental gloves p.a. 30% of Adventa’s examination and
1.9
Dec-09 May-10 Oct-10
0.00
dental gloves are nitrile. Headquartered in Kota Bharu, Kelantan, the group has
Volume 10m (R.H.Scale) Adventa Bhd manufacturing facilities in Kota Bharu, Kluang in Johor and Montevideo in Uruguay.
Source: Bloomberg
Equity raised/(repaid) 0 6 0 0 0
3.0
Dividends paid (6) (4) (3) (5) (7) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (3) (3) 16 10 8
Cash flow from financing 10 1 25 18 15
Change in cash 0 1 (2) 0 18
Change in net cash/(debt) (19) 0 (14) (13) 4
Ending net cash/(debt) (77) (77) (91) (104) (100)
Source: Company, CIMB Research, Bloomberg
MALAYSIA
OUTPERFORM Maintained
Affin Holdings Bhd RM3.20 @07/12/10
Small bank gaining ground Target: RM4.04
Banks
AHB MK / AFIN.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Net interest income (RM m) 724.2 818.3 875.3 967.5 1,048.9
Non-interest income (RM m) 313.3 378.7 398.4 425.6 464.7
Total income (RM m) 1,137.8 1,299.1 1,370.9 1,497.6 1,619.7
Stock Information Loan loss provisions (RM m) (100.5) (185.1) (93.3) (95.2) (90.7)
Pretax profit (RM m) 404.2 497.2 623.5 717.8 785.8
Market cap: RM4,783m/US$1,520m
Net profit (RM m) 292.8 371.9 474.3 546.2 598.0
12-m price range: RM3.26
EPS (sen) 19.6 24.9 31.7 36.6 40.0
RM2.29
EPS growth (%) 16% 27% 28% 15% 9%
3-m avg daily vol: 0.8m
P/E (x) 16.3 12.9 10.1 8.8 8.0
No. of shrs (m): 1,495
Gross DPS (sen) 5.0 8.5 10.6 12.3 13.4
Est. free float (%): 23.0
Conv. secs (m): None Dividend yield (%) 1.6% 2.7% 3.3% 3.8% 4.2%
Major shareholders (%): P/BV (x) 1.1 1.0 0.9 0.9 0.8
- LTAT 35.7 ROE (%) 6.8% 8.1% 9.6% 10.2% 10.3%
- Bank of East Asia 21.2 % change in EPS estimates - - -
- Boustead 20.7 CIMB/Consensus (x) 1.00 1.03 1.04
Source: Company, CIMB Research, Bloomberg
3.1
0.80
0.70
RM45bn. It was incorporated in 1975 under the name Perwira Habib Bank. Its ultimate
2.9 0.60
0.50
shareholder is the armed forces retirement fund, LTAT. Its wholly-owned Affin Bank
2.7
2.5
0.40
0.30
commenced operations in Jan 01 following a merger of Perwira Affin Bank and BSN
2.3
0.20
0.10
Commercial in Aug 00. In Jun 05, the bank was merged with Affin-ACF Finance. Hong
2.1
Dec-09 May-10 Oct-10
0.00
Kong-based Bank of East Asia subscribed to 193.2m new shares in Affin in Oct 07,
Volume 10m (R.H.Scale) Affin Holdings Bhd making it a strategic partner with a 20% stake. Consumer loans account for 43% of
Source: Bloomberg Affin’s loan base, followed by 26.8% for SME loans and 22% for corporate loans.
13.0
1.00
12.0
0.90 11.0
10.0
0.80
9.0
0.70
8.0
0.60 7.0
6.0
0.50
5.0
0.40 4.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
AirAsia Bhd RM2.61 @07/12/10
Risks dissipating, business booming Target: RM3.85
Airlines
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 2,851.8 3,178.9 3,944.4 4,514.0 5,187.9
EBITDA (RM m) 525.7 1,193.7 1,585.8 1,877.4 2,299.9
EBITDA margins (%) 18.4% 37.6% 40.2% 41.6% 44.3%
Pretax profit (RM m) (869.2) 639.6 1,860.4 896.3 1,353.3
Net profit (RM m) (496.6) 549.2 1,914.2 887.5 1,339.5
EPS (sen) (20.9) 22.2 69.3 32.0 48.3
EPS growth (%) (170.8%) 206.3% 211.5% (53.8%) 50.9%
P/E (x) nm 11.7 3.8 8.2 5.4
Core EPS (sen) 2.8 18.2 27.5 35.1 48.3
Core EPS growth (%) (70.7%) 546.5% 50.8% 27.7% 37.8%
Stock Information
Core P/E (x) 92.7 14.3 9.5 7.4 5.4
Market cap: RM7,235m/US$2,306m Gross DPS (sen) 0.0 0.0 0.0 0.0 0.0
12-m price range: RM2.65 Dividend yield (%) 0.0% 0.0% 0.0% 0.0% 0.0%
RM1.11 P/BV (x) 3.9 2.7 1.6 1.3 1.1
3-m avg daily vol: 7.8m ROE (%) (26.8%) 25.7% 52.9% 17.7% 21.8%
No. of shrs (m): 2,772 Net gearing (%) 407.2% 257.0% 137.2% 104.4% 74.6%
Est. free float (%): 70.0 P/FCFE (x) (22.8) 75.9 4.4 9.6 6.2
Conv. secs (m): None EV/EBITDA (x) 24.2 11.1 8.5 6.9 5.4
Major shareholders (%): % change in EPS estimates N/A N/A N/A
- Tune Air 25.9 CIMB/Consensus (x) 0.96 1.13 1.36
Source: Company, CIMB Research, Bloomberg
2.50
operates a fleet of 52 aircraft in Malaysia, as well as 18 planes in Thailand and 15 in
2.2
2.0 2.00 Indonesia. It has 225 Airbus A320s on order, with 76 delivered to date. Over the past
1.8
1.6
1.50
year, AirAsia expanded its flights from Malaysia to India, after its foray into HK and
1.00
1.4
1.2 0.50
south China. AirAsia also owns 16% of AirAsia X, its long-haul low-cost associate that
1.0
De c-09 Ma y-10 Oct-10
0.00
flies to Australia, China, Japan, South Korea, north India and the UK. It also owns
Volume 10m (R.H.S ca le ) AirAs ia Bhd 49% stakes in Thai AirAsia and Indonesia AirAsia. Both associates and AirAsia X are
Source: Bloomberg targeted to be listed in 2011-12.
MALAYSIA
UNDERPERFORM Maintained
Alliance Financial Group RM3.08 @07/12/10
Continued headwinds for the topline Target: RM3.11
Banks
AFG MK / ALFG.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Net interest income (RM m) 654.6 616.9 679.0 751.3 813.4
Non-interest income (RM m) 365.4 391.3 429.9 468.3 516.0
Total income (RM m) 1,054.7 1,064.5 1,185.4 1,292.2 1,401.6
Stock Information Loan loss provisions (RM m) (115.1) 31.9 (61.5) (66.3) (75.6)
Pretax profit (RM m) 303.3 408.9 555.5 623.5 698.0
Market cap: RM4,768m/US$1,520m
Net profit (RM m) 229.1 301.4 416.6 467.5 523.4
12-m price range: RM3.30
EPS (sen) 14.8 19.5 26.9 30.2 33.8
RM2.41
EPS growth (%) (46%) 32% 38% 12% 12%
3-m avg daily vol: 1.9m
P/E (x) 20.8 15.8 11.4 10.2 9.1
No. of shrs (m): 1,548
Gross DPS (sen) 8.3 8.5 11.8 13.3 14.4
Est. free float (%): 65.0
Conv. secs (m): None Dividend yield (%) 2.7% 2.8% 3.8% 4.3% 4.7%
Major shareholders (%): P/BV (x) 1.7 1.6 1.5 1.4 1.2
- Duxton Investment 14.5 ROE (%) 8.6% 10.6% 13.5% 13.9% 14.2%
- Langkah Bahagia 14.5 % change in EPS estimates - - -
- EPF 15.7 CIMB/Consensus (x) 1.04 1.04 1.01
Source: Company, CIMB Research, Bloomberg
2.6
3.00
2.00
Multi-Purpose Bank, International Bank Malaysia, Bolton Finance, Bumiputra
2.4 1.00 Merchant Bankers, Sabah Bank, Sabah Finance and Amanah Merchant Bank in 2001.
2.2
De c-09 Ma y-10 Oct-10
0.00
In 2005, Temasek bought an effective stake of 15% in Alliance and appointed a new
Volume 10m (R.H.S ca le ) Allia nce Fina ncia l Group management team headed by Datuk Bridget Lai who was replaced by Mr. Sng Seow
Source: Bloomberg Wah in Jul 10. On 31 Dec 04, Alliance acquired 100% of Kuala Lumpur City Securities
(KLCS) to strengthen its investment banking business.
1.90
18.0
1.70
16.0
1.50
14.0
1.30
12.0
1.10
10.0
0.90 8.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
MALAYSIA
OUTPERFORM Maintained
AMMB Holdings Bhd RM6.26 @07/12/10
Riding on ANZ momentum Target: RM8.20
Banks
AMM MK / AMMB.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Net interest income (RM m) 1,776.3 1,886.6 2,272.4 2,615.3 2,903.3
Non-interest income (RM m) 1,160.5 1,671.2 1,888.8 2,152.8 2,362.6
Total income (RM m) 2,927.6 3,577.8 4,174.6 4,799.6 5,286.0
Stock Information Loan loss provisions (RM m) (344.2) (568.9) (583.1) (620.1) (716.7)
Pretax profit (RM m) 1,217.5 1,376.7 1,945.0 2,447.5 2,724.3
Market cap: RM18,869m/US$6,015m
Net profit (RM m) 860.8 1,008.6 1,403.3 1,770.0 1,967.5
12-m price range: RM6.35
EPS (sen) 31.6 35.2 46.6 58.7 65.3
RM4.61
EPS growth (%) 15% 11% 32% 26% 11%
3-m avg daily vol: 3.7m
P/E (x) 19.8 17.8 13.4 10.7 9.6
No. of shrs (m): 3,014
Gross DPS (sen) 8.0 12.5 21.7 27.4 30.5
Est. free float (%): 60.0
Conv. secs (m): None Dividend yield (%) 1.3% 2.0% 3.5% 4.4% 4.9%
Major shareholders (%): P/BV (x) 2.2 2.0 1.7 1.5 1.4
- ANZ 23.8 ROE (%) 11.6% 11.6% 13.7% 15.4% 15.2%
- Amcorp 16.7 % change in EPS estimates - - -
- EPF 12.4 CIMB/Consensus (x) 1.07 1.17 1.12
Source: Company, CIMB Research, Bloomberg
1.90
13.0
1.70 12.0
11.0
1.50
10.0
1.30 9.0
1.10 8.0
7.0
0.90
6.0
0.70 5.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Ann Joo Resources RM2.94 @07/12/10
Pedal to the metal Target: RM3.74
Steel
• Maintain TRADING BUY. Ann Joo’s TRADING BUY call and EPS forecasts are
intact. Although we continue to value the stock at a 10% discount to our target
market P/E, our target price increases from RM3.60 to RM3.74 because of a
revision in our target market P/E from 13.8x to 14.5x. Potential re-rating catalysts
are 1) new LCCT and LRT construction starts, 2) commissioning of Ann Joo’s
0.68m-1.1m mt blast furnace within 1H11, and 3) legislation of the MSA’s proposals
such as favourable energy tariffs and import duties. Ann Joo’s FY11 5.8% dividend
yield is also the highest in the sector.
• Mega construction jobs. The 10th MP and Budget 2011 revealed big projects
such as the KL MRT, LRT, new LCCT and high-speed rail project, which will boost
construction activities and reinvigorate steel demand. Awards for RM1.6bn out of
the RM7bn LRT extension have already been announced and we expect more
announcements in 2011. This is positive as elevated projects tend to use more steel
relative to other materials.
• Export steel prices to recover in 2011. We expect international steel prices to
recover in 2011 due to 1) US$50bn in government spending to urbanise Chinese
rural areas and 2) lower global steel supply as China races to meet energy
consumption targets by decommissioning obsolete plants. As at Sep, 35m mt of
iron- and 9m mt of steel-making capacity have already been eliminated.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 2,222.1 1,303.0 1,900.3 2,045.8 2,293.2
EBITDA (RM m) 153.6 103.7 245.9 280.5 370.1
EBITDA margins (%) 6.9% 8.0% 12.9% 13.7% 16.1%
Pretax profit (RM m) 119.5 36.3 179.9 215.9 308.3
Net profit (RM m) 139.4 31.6 132.1 157.7 224.9
EPS (sen) 26.7 6.0 25.3 30.2 43.0
EPS growth (%) (21.7%) (77.3%) 317.8% 19.4% 42.6%
P/E (x) 11.0 48.6 11.6 9.7 6.8
Core EPS (sen) 23.9 6.0 25.3 30.2 43.0
Core EPS growth (%) (21.7%) (74.7%) 317.8% 19.4% 42.6%
Stock Information
Core P/E (x) 12.3 48.6 11.6 9.7 6.8
Market cap: RM1,537m/US$490m FD core EPS (sen) 15.9 4.0 16.8 20.1 28.7
12-m price range: RM3.35 FD core P/E (x) 18.4 72.9 17.5 14.6 10.3
RM2.25 Gross DPS (sen) 12.0 6.0 14.0 17.0 23.0
3-m avg daily vol: 0.5m Dividend yield (%) 4.1% 2.0% 4.8% 5.8% 7.8%
No. of shrs (m): 523 P/BV (x) 1.7 1.7 1.6 1.4 1.3
Est. free float (%): 37.8 ROE (%) 16.3% 3.5% 14.0% 15.3% 19.7%
Conv. secs (m): 261.4 Net gearing (%) 109.0% 93.5% 81.7% 68.5% 50.9%
Major shareholders (%): P/FCFE (x) 30.1 598.0 8.6 151.8 16.0
- Ann Joo Corporation 62.2 EV/EBITDA (x) 16.7 23.3 9.6 8.2 5.9
- Lembaga Tabung Haji 5.1 % change in EPS estimates N/A N/A N/A
- Seng Lim Chee 1.1 CIMB/Consensus (x) 0.89 0.89 1.12
Source: Company, CIMB Research, Bloomberg
2.9 1.50
trading of steel and steel-related products and is now one of Malaysia’s largest steel
2.7
1.00 manufacturers, stockists and traders of steel products. It also operates service
2.5
2.3
0.50 centres. Its plant in Prai, Penang has a total annual rated steel manufacturing
2.1
Dec-09 May-10 Oct-10
0.00
capacity of 680,000 mt and a total annual rated steel rolling capacity of 630,000 mt of
Volume 1m (R.H.Scale) Ann Joo Resources steel bars and wire rods. The group’s products are primarily used in construction.
Source: Bloomberg
Cash flow from investing (265) (119) (216) (45) (61) 12.0
Debt raised/(repaid) 421 (145) 101 (100) (90) 10.0
Equity raised/(repaid) (25) (14) 0 0 0
8.0
Dividends paid (77) (12) (32) (43) (64) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (28) (3) (10) (1) 1
Cash flow from financing 291 (174) 59 (143) (153)
Change in cash (57) (9) 144 (33) 32
Change in net cash/(debt) (478) 136 43 67 121
Ending net cash/(debt) (997) (861) (818) (751) (630)
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Asia File Corporation RM4.45 @07/12/10
File is at the right location Target: RM6.36
Retail
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 298.4 267.5 296.7 326.3 359.0
EBITDA (RM m) 52.9 63.1 74.9 84.8 91.4
EBITDA margins (%) 17.7% 23.6% 25.2% 26.0% 25.5%
Pretax profit (RM m) 76.4 66.0 80.7 91.1 97.7
Stock Information Net profit (RM m) 72.8 57.7 66.1 75.1 80.1
EPS (sen) 64.5 51.2 58.6 66.6 71.0
Market cap: RM514m/US$164m EPS growth (%) 78.9% (20.7%) 14.6% 13.6% 6.6%
12-m price range: RM5.26 P/E (x) 6.9 8.7 7.6 6.7 6.3
RM4.23 Gross DPS (sen) 25.3 27.8 32.7 32.7 32.7
3-m avg daily vol: 0.0m Dividend yield (%) 5.7% 6.2% 7.4% 7.4% 7.4%
No. of shrs (m): 115 P/BV (x) 1.8 1.6 1.4 1.2 1.1
Est. free float (%): 40.0 ROE (%) 29.1% 19.4% 19.5% 19.7% 18.5%
Conv. secs (m): None Net cash per share (RM) 0.01 0.22 0.44 0.85 1.18
Major shareholders (%): P/FCFE (x) (28.8) 11.0 14.0 7.0 7.9
- Prestige Elegance S/B 45.5 EV/EBITDA (x) 9.5 7.6 6.0 4.8 4.0
- PNB 13.5 % change in EPS estimates - - -
- ASB 13.2 CIMB/Consensus (x) 0.99 0.99 1.00
Source: Company, CIMB Research, Bloomberg
5.2 2.50 manufacturer and distributor, selling under the "ABBA" brand. Its HQ and
5.0
4.8
2.00 manufacturing base is in Penang, Malaysia. It also operates major warehouses in
4.6
1.50
1.00
Puchong, the Klang Valley and Basingstoke, UK. The US and UK are its largest
4.4
4.2 0.50 export markets, taking up more than 70% of its sales. Acquisition of Plastoreg,
4.0
De c-09 Ma y-10 Oct-10
0.00
Europe's largest OEM producer of dividers and indices, has transformed Asia File into
Volume 100k (R.H.S c a le ) As ia File Corpora tion the world’s largest OEM producer of indices and dividers. It also makes Asia File a
Source: Bloomberg major stationery distributor in Europe and not just an export player.
Cash flow from investing (75) (1) (10) (10) (10) 8.0
Debt raised/(repaid) (15) 0 (15) 0 0 7.0
Equity raised/(repaid) 0 0 0 0 0
6.0
Dividends paid (20) (21) (26) (26) (26) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (1) 0 0 0 0
Cash flow from financing (37) (21) (41) (26) (26)
Change in cash (39) 24 10 46 38
Change in net cash/(debt) (24) 24 25 46 38
Ending net cash/(debt) 1 25 50 96 133
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Axiata Group Berhad RM4.67 @07/12/10
A one-stop Asian telco shop Target: RM5.90
Telecommunications - Mobile
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 11,347.7 13,105.5 15,744.0 17,174.5 18,426.8
EBITDA (RM m) 4,541.8 5,156.7 7,165.5 7,812.8 8,349.2
EBITDA margins (%) 40.0% 39.3% 45.5% 45.5% 45.3%
Pretax profit (RM m) 905.8 2,666.2 4,181.2 4,836.1 5,287.6
Net profit (RM m) 444.2 1,652.7 2,745.4 3,075.5 3,303.7
EPS (sen) 8.1 22.9 32.5 36.4 39.1
EPS growth (%) (76.2%) 183.9% 42.1% 12.0% 7.4%
P/E (x) 57.9 20.4 14.4 12.8 11.9
Stock Information Core EPS (sen) 19.7 15.6 32.5 36.4 39.1
Core EPS growth (%) (33.8%) (20.8%) 108.5% 12.0% 7.4%
Market cap: RM39,439m/US$12,572m Core P/E (x) 23.7 30.0 14.4 12.8 11.9
12-m price range: RM4.74 Gross DPS (sen) 0.0 0.0 10.0 11.0 12.0
RM3.01 Dividend yield (%) 0.0% 0.0% 2.1% 2.4% 2.6%
3-m avg daily vol: 14.8m P/BV (x) 2.3 2.2 2.0 1.8 1.6
No. of shrs (m): 8,445 ROE (%) 4.2% 11.2% 14.3% 14.5% 14.1%
Est. free float (%): 38.2 Net gearing (%) 142.7% 54.6% 26.3% 10.7% N/A
Conv. secs (m): None Net cash per share (RM) N/A N/A N/A N/A 0.09
Major shareholders (%): P/FCFE (x) 22.3 (5.1) 12.0 10.2 9.3
- Khazanah 44.5 EV/EBITDA (x) 9.4 8.7 6.4 5.6 4.9
- Employees Provident Fund 9.4 % change in EPS estimates - - -
- Amanah Saham Bumi 7.9 CIMB/Consensus (x) 0.98 0.99 0.93
Source: Company, CIMB Research, Bloomberg
4.3 0.40
has stakes in mobile operators in some of the largest, fastest-growing countries in
3.8
0.30
Asia – 100% of Malaysia’s Celcom, 66.5% of Indonesia’s XL Axiata, 84.7% of Sri
0.20 Lanka’s Dialog, 70% of Bangladesh’s Robi, 100% of Cambodia’s Hello, 19.3% of
3.3
0.10 India’s Idea Cellular and 29.7% of Singapore’s M1. Axiata's units have a strong
2.8
De c-09 Ma y-10 Oct-10
0.00
foothold in these markets, mostly ranking in the top 3. It plans to dispose of its non-
Volume 100m (R.H.S ca le ) Axia ta Group Be rha d
mobile assets. Axiata was formerly known as TM International.
Source: Bloomberg
MALAYSIA
NEUTRAL Maintained
Berjaya Sports Toto Bhd RM4.25 @07/12/10
Betting on yields Target: RM4.67
Gaming
BST MK / BSTB.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Apr 2009 2010 2011F 2012F 2013F
Revenue (RM m) 3,695.7 3,392.3 3,503.7 3,578.0 3,578.0
EBITDA (RM m) 613.0 578.1 521.8 556.1 557.3
EBITDA margins (%) 16.6% 17.0% 14.9% 15.5% 15.6%
Pretax profit (RM m) 585.5 546.2 474.5 524.4 527.0
Net profit (RM m) 413.6 381.7 332.2 372.9 374.8
EPS (sen) 30.6 28.3 24.6 27.6 27.7
Stock Information EPS growth (%) 18.6% (7.7%) (13.0%) 12.2% 0.5%
Market cap: RM5,742m/US$1,830m P/E (x) 13.9 15.0 17.3 15.4 15.3
12-m price range: RM4.64 Gross DPS (sen) 33.6 34.1 28.4 29.2 30.1
RM4.07 Dividend yield (%) 7.9% 8.0% 6.7% 6.9% 7.1%
3-m avg daily vol: 1.4m P/BV (x) 11.9 12.9 9.7 8.5 7.7
No. of shrs (m): 1,351 ROE (%) 102.0% 82.4% 63.9% 58.9% 53.0%
Est. free float (%): 35.0 Net gearing (%) 5.2% 40.5% 9.4% N/A N/A
Conv. secs (m): None Net cash per share (RM) N/A N/A N/A 0.02 0.08
Major shareholders (%): P/FCFE (x) 16.3 11.3 8.7 17.0 16.5
- Berjaya Land 43.5 EV/EBITDA (x) 9.4 10.3 11.1 10.3 10.1
- Bank Sarasin-Rabo (Asia) 3.1 % change in EPS estimates - - -
- AIA Bhd 1.9 CIMB/Consensus (x) 0.88 0.94 0.91
Source: Company, CIMB Research, Bloomberg
4.4 1.00 operations (NFO) by offering the highest number of games among its legal peers –
4.2
0.80
0.60
three NFO games (4D, 5D, 6D) and three lotto games (6/52 Mega Jackpot, 6/55
4.0
0.40
0.20
Power Toto and 6/58 Supreme Toto). Supreme Toto is a new game which recently
3.8
De c-09 Ma y-10 Oct-10
0.00
replaced the Toto 6/49 lotto variant. B-Toto remains the leading NFO player in
Volume 10m (R.H.S ca le ) Be rja ya S ports Toto Bhd Malaysia with an estimated 40% share of the legal NFO market.
Source: Bloomberg
Others 0 (93) 0 0 0
Cash flow from investing (36) (108) (6) (7) (8) 12.40
Debt raised/(repaid) (97) 187 178 (31) (30)
Equity raised/(repaid) 0 (35) 0 0 0
10.40
Dividends paid (241) (433) (361) (287) (295) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (12) (33) (17) (13) (10)
Cash flow from financing (350) (313) (200) (332) (335)
Change in cash 111 26 308 50 53
Change in net cash/(debt) 208 (161) 130 81 83
Ending net cash/(debt) (26) (187) (57) 24 106
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Bintulu Port Holdings Bhd RM6.60 @07/12/10
A dividend play Target: RM6.95
Ports
BPH MK / BPOT.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
• Maintain NEUTRAL. Bintulu Port’s key appeal lies in its relatively stable income
stream which helps support its attractive gross yields of 7-8%. On a more macro
level, the continued economic growth and newsflow on the rollout of new projects
within the Sarawak Corridor of Renewable Energy (Score) should provide some
excitement to the stock. But Bintulu Port is trading at premium valuations of 17.6x
forward P/E and 3.2x P/BV. Low liquidity is another dampener. We remain
NEUTRAL on the stock with an unchanged DCF-based target price of RM6.95. We
prefer Malaysia Airports (MAHB MK, Outperform) for exposure to the transport
infrastructure sector.
• Economic growth bodes well for port activities. Our economics team is
projecting GDP growth of 5.5% for 2011, which bodes well for port activities. While
liquefied natural gas (LNG) cargo should remain relatively stable due to the long-
term nature of the contracts, potential upside could come from non-LNG cargo as
internal and external demand increases on the back of a pickup in economic
activities.
• Still very much a dividend play. While new projects under Score could provide a
kicker to Bintulu Port’s earnings, we do not expect contribution from this corridor to
be significant yet. But in the longer run, Bintulu Port stands to gain from the import
and export requirements of the new industries. For now, earnings should remain
largely stable, underpinned by the LNG cargo. The stock’s key appeal lies in its
attractive gross yields of 7-8% which should provide support to its share price.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 448.8 439.0 472.9 501.8 517.9
EBITDA (RM m) 213.9 187.2 215.4 234.0 245.4
EBITDA margins (%) 47.7% 42.6% 45.5% 46.6% 47.4%
Pretax profit (RM m) 205.9 173.5 190.7 200.2 209.5
Net profit (RM m) 150.6 128.8 143.0 150.2 157.1
Stock Information
EPS (sen) 37.7 32.2 35.8 37.5 39.3
Market cap: RM2,640m/US$839m EPS growth (%) 11.0% (14.5%) 11.1% 5.0% 4.6%
12-m price range: RM7.00 P/E (x) 17.5 20.5 18.5 17.6 16.8
RM6.18 Gross DPS (sen) 55.0 50.0 55.0 55.0 55.0
3-m avg daily vol: 0.0m Dividend yield (%) 8.3% 7.6% 8.3% 8.3% 8.3%
No. of shrs (m): 400 P/BV (x) 3.0 3.1 3.2 3.2 3.3
Est. free float (%): 21.6 ROE (%) 17.0% 14.9% 17.1% 18.3% 19.4%
Conv. secs (m): None Net cash per share (RM) 1.15 0.78 0.57 0.45 0.45
Major shareholders (%): P/FCFE (x) 17.4 156.7 39.3 25.0 17.2
- Petroliam Nasional Bhd 32.8 EV/EBITDA (x) 10.2 12.4 11.2 10.5 10.0
- State Financial Secretary 30.7 % change in EPS estimates - - -
- KWAP 9.5 CIMB/Consensus (x) 0.97 0.98 0.95
Source: Company, CIMB Research, Bloomberg
7.0
10.00
Port since 1993. Besides being the sole export gateway for liquefied natural gas in
8.00
6.8
6.6 6.00
Malaysia and a leading container hub in East Malaysia, the port is also equipped to
6.4
4.00
handle other types of cargo including dry, liquid and break bulk cargo. Strategically
6.2
6.0
2.00 located in the BIMP-EAGA region, it is well-positioned to serve Malaysia’s major LNG
5.8
De c-09 Ma y-10 Oct-10
0.00
exports, the resource-rich Sarawak hinterland as well as the increasing activity in that
Volume 100k (R.H.S ca le ) Bintulu P ort Holding s Bhd region. Bintulu Port’s subsidiary, Biport Bulkers Sdn Bhd, provides bulking installation
Source: Bloomberg facilities for palm oil, edible oil, vegetable oil and its by-products.
Cash flow from investing (28) (90) (100) (80) (40) 16.0
Debt raised/(repaid) 0 0 0 0 0
15.5
Equity raised/(repaid) 0 0 0 0 0
15.0
Dividends paid (163) (148) (163) (163) (163) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 0 (14) 12 9 8
Cash flow from financing (163) (162) (151) (154) (155)
Change in cash (11) (145) (84) (48) (1)
Change in net cash/(debt) (11) (145) (84) (48) (1)
Ending net cash/(debt) 462 314 230 182 181
Source: Company, CIMB Research, Bloomberg
MALAYSIA
UNDERPERFORM Maintained
British American Tobacco Bhd RM45.48 @07/12/10
Feeling the drag Target: RM44.00
Tobacco
ROTH MK / BATO.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 4,135.2 3,923.4 3,951.2 4,095.7 4,142.3
EBITDA (RM m) 1,182.3 1,108.9 1,080.8 1,110.2 1,132.8
EBITDA margins (%) 28.6% 28.3% 27.4% 27.1% 27.3%
Pretax profit (RM m) 1,081.2 1,005.3 973.2 999.2 1,021.8
Net profit (RM m) 811.8 746.8 729.9 749.4 766.3
Stock Information
EPS (sen) 284.3 261.5 255.6 262.5 268.4
Market cap: RM12,986m/US$4,127m EPS growth (%) 10.9% (8.0%) (2.3%) 2.7% 2.3%
12-m price range: RM49.94 P/E (x) 16.0 17.4 17.8 17.3 16.9
RM41.60 Gross DPS (sen) 361.0 314.7 315.0 325.0 330.0
3-m avg daily vol: 0.1m Dividend yield (%) 7.9% 6.9% 6.9% 7.1% 7.3%
No. of shrs (m): 286 P/BV (x) 31.9 29.6 24.8 22.5 20.4
Est. free float (%): 30.0 ROE (%) 215.7% 176.5% 151.7% 136.3% 126.4%
Conv. secs (m): None Net gearing (%) 145.2% 109.6% 90.3% 68.6% 47.5%
Major shareholders (%): P/FCFE (x) 17.6 15.7 15.2 17.3 16.2
- BAT BV 50.0 EV/EBITDA (x) 11.5 12.1 12.5 12.1 11.7
- PNB 6.1 % change in EPS estimates - - -
- Lazard Asset Management 2.5 CIMB/Consensus (x) 1.01 1.03 1.04
Source: Company, CIMB Research, Bloomberg
43.5
2.00 63% market share, BAT is the clear leader in the industry, followed by JT International
41.5 1.00 and Philip Morris. Its portfolio includes Dunhill, Pall Mall, Peter Stuyvesant and
39.5
De c -09 Ma y-10 Oct-10
0.00
Benson and Hedges. Dunhill is the dominant brand in the premium cigarette segment
Volume 100k (R.H.S ca le ) Britis h Ame rica n Toba cco Bhd and accounts for close to an estimated 72% of BAT’s total sales. In the value-for-
Source: Bloomberg money (VFM) space, BAT is the No. 2 player after JT International.
Cash flow from investing (87) (74) (55) (55) (55) 15.0
Debt raised/(repaid) (100) 0 0 0 0
14.5
Equity raised/(repaid) 0 0 0 0 0
14.0
Dividends paid (751) (714) (847) (675) (707) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (28) (24) (21) (21) (17)
Cash flow from financing (879) (738) (868) (695) (724)
Change in cash (11) 113 9 77 93
Change in net cash/(debt) 89 113 9 77 93
Ending net cash/(debt) (591) (481) (473) (396) (302)
Source: Company, CIMB Research, Bloomberg
MALAYSIA
NEUTRAL Maintained
Bursa Malaysia Bhd RM7.96 @07/12/10
Taking stock of the swift growth Target: RM8.64
Stockbroking & Exchanges
BURSA MK / BMYS.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
• Retain NEUTRAL. With our EPS forecasts and target price of RM8.64 unchanged,
we maintain our NEUTRAL call on Bursa as the anticipated strong earnings growth
in FY11 has been priced in given the high FY12 P/E of 24.9x. Although we expect
velocity to pick up to 35% in 2011, it will still be lower than the average of 40%
registered in 2007-09. For exposure to equity market, we prefer AMMB Holdings
which derives about 3% of its revenue from brokerage income, the highest
percentage among the banking groups.
• Equity-driven earnings growth. We envisage a 28.6% jump in FY11 EPS,
primarily driven by higher equity income due to the continuing inflow of foreign
funds. Equity income is projected to surge 33.5% to RM178.7m in FY11 as a result
of an assumed 10% rise in market capitalisation and an increase in velocity from
32% in 2010 to 35% in 2011.
• Improving derivative income. Derivative income should be on the rise as Bursa’s
tie-up with Chicago Mercantile Exchange (CME) to promote its derivative products
in the international market will start to bear fruit. We are forecasting a 20.1% jump in
derivative income to RM63.7m in FY11.
• Retain earnings forecasts and target price. We retain our earnings forecasts and
target price of RM8.64, pegged to an unchanged 27x target P/E or a 10% discount
to the stock’s 3-year historical average.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 302.3 297.6 301.9 357.6 391.0
EBITDA (RM m) 137.5 153.9 147.9 196.7 219.7
EBITDA margins (%) 45.5% 51.7% 49.0% 55.0% 56.2%
Pretax profit (RM m) 145.6 219.2 155.2 199.7 220.2
Net profit (RM m) 104.4 177.6 118.1 151.8 167.3
EPS (sen) 20.0 34.0 22.6 29.0 32.0
EPS growth (%) (56.7%) 70.1% (33.5%) 28.6% 10.2%
Stock Information P/E (x) 39.9 23.4 35.3 27.4 24.9
Core EPS (sen) 20.0 22.2 22.6 29.0 32.0
Market cap: RM4,230m/US$1,344m Core EPS growth (%) (56.7%) 11.1% 1.8% 28.6% 10.2%
12-m price range: RM8.63 Core P/E (x) 39.9 35.9 35.3 27.4 24.9
RM6.78 Gross DPS (sen) 24.3 40.8 27.1 34.8 38.4
3-m avg daily vol: 1.2m Dividend yield (%) 3.1% 5.1% 3.4% 4.4% 4.8%
No. of shrs (m): 531 P/BV (x) 5.7 5.0 4.9 4.8 4.7
Est. free float (%): 60.0 ROE (%) 13.8% 22.6% 13.9% 17.6% 19.0%
Conv. secs (m): None Net cash per share (RM) 2.19 2.20 2.12 2.05 1.98
Major shareholders (%): P/FCFE (x) 36.8 30.9 42.3 50.3 34.0
- Ministry of Finance Inc. 18.9 EV/EBITDA (x) 22.0 19.6 20.7 15.8 14.3
- Capital Market Development 18.9 % change in EPS estimates - - -
- Newton Investment 5.7 CIMB/Consensus (x) 0.91 1.00 0.97
Source: Company, CIMB Research, Bloomberg
MALAYSIA
NEUTRAL Maintained
Carlsberg Brewery (M) Bhd RM6.05 @07/12/10
Fizz from down south Target: RM6.70
Brewers
CAB MK / CBMS.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 960.2 1,045.5 1,358.4 1,387.9 1,415.1
EBITDA (RM m) 114.9 117.6 196.5 202.7 215.8
EBITDA margins (%) 12.0% 11.2% 14.5% 14.6% 15.3%
Pretax profit (RM m) 101.3 102.6 169.5 182.6 197.1
Stock Information Net profit (RM m) 76.1 76.1 131.2 141.2 152.2
EPS (sen) 24.9 24.9 42.9 46.2 49.8
Market cap: RM1,864m/US$594m EPS growth (%) (3.0%) 0.0% 72.3% 7.6% 7.8%
12-m price range: RM6.05 P/E (x) 24.3 24.3 14.1 13.1 12.2
RM4.43 Gross DPS (sen) 12.5 20.5 35.0 37.0 39.0
3-m avg daily vol: 0.1m Dividend yield (%) 2.1% 3.4% 5.8% 6.1% 6.4%
No. of shrs (m): 308 P/BV (x) 3.9 3.6 3.3 3.0 2.7
Est. free float (%): 30.0 ROE (%) 16.2% 15.4% 24.2% 23.7% 23.2%
Conv. secs (m): None Net cash per share (RM) 0.72 0.36 N/A 0.10 0.33
Major shareholders (%): P/FCFE (x) 20.9 (23.3) (19.1) 13.0 12.1
- Carlsberg Breweries A/S 51.0 EV/EBITDA (x) 14.1 14.6 9.5 8.9 8.0
- Kim Keow Chan 5.9 % change in EPS estimates - - -
- State Street Corp 0.7 CIMB/Consensus (x) 1.06 1.08 1.21
Source: Company, CIMB Research, Bloomberg
Others 4 (6) 0 0 0
12.0
Cash flow from investing (19) (188) (211) (13) (13)
Debt raised/(repaid) 2 2 0 0 0 11.0
Equity raised/(repaid) 1 0 0 0 0
10.0
Dividends paid (79) (29) (46) (78) (83) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 0 0 3 (1) 1
Cash flow from financing (77) (27) (43) (79) (82)
Change in cash 10 (108) (143) 63 70
Change in net cash/(debt) 9 (110) (143) 64 70
Ending net cash/(debt) 221 110 (33) 31 102
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Daibochi Plastic & Packaging RM2.45 @07/12/10
Stretching its client base Target: RM3.92
Packaging
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 217.2 221.8 245.8 282.8 311.1
EBITDA (RM m) 16.7 33.1 32.4 41.6 47.2
EBITDA margins (%) 7.7% 14.9% 13.2% 14.7% 15.2%
Pretax profit (RM m) 9.0 27.1 24.2 33.2 38.7
Net profit (RM m) 8.1 22.7 18.4 25.3 29.3
EPS (sen) 10.7 29.9 24.3 33.3 38.6
EPS growth (%) (6.9%) 180.2% (18.8%) 37.1% 16.0%
Stock Information
P/E (x) 23.0 8.2 10.1 7.4 6.3
Market cap: RM186m/US$59m Gross DPS (sen) 8.2 21.2 16.6 22.8 26.4
12-m price range: RM3.85 Dividend yield (%) 3.4% 8.7% 6.8% 9.3% 10.8%
RM2.05 P/BV (x) 1.6 1.5 1.3 1.2 1.1
3-m avg daily vol: 0.1m ROE (%) 7.1% 18.4% 13.9% 17.1% 18.2%
No. of shrs (m): 76 Net gearing (%) 23.8% 11.8% 3.4% N/A N/A
Est. free float (%): 50.0 Net cash per share (RM) N/A N/A N/A 0.01 0.25
Conv. secs (m): None P/FCFE (x) 929.8 7.7 9.8 9.7 5.7
Major shareholders (%): EV/EBITDA (x) 12.8 6.1 5.9 4.5 3.6
- Low Chan Tian 11.7 % change in EPS estimates - - -
- Datuk Wong Soon Lim 6.5 CIMB/Consensus (x) 0.87 0.98 1.04
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
Dialog Group Bhd RM1.60 @07/12/10
Tanking up in Pengerang Target: RM1.15
Oil & Gas - Equipment & Svs
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,104.3 1,139.1 2,027.6 2,558.5 2,822.0
EBITDA (RM m) 105.5 130.7 148.3 170.1 185.0
EBITDA margins (%) 9.6% 11.5% 7.3% 6.7% 6.6%
Pretax profit (RM m) 123.5 151.0 174.4 200.5 219.9
Net profit (RM m) 92.2 116.1 130.6 150.2 164.7
EPS (sen) 4.7 5.9 6.6 7.6 8.3
Stock Information EPS growth (%) 17.6% 26.0% 12.5% 15.0% 9.7%
Market cap: RM3,181m/US$1,014m P/E (x) 34.4 27.3 24.3 21.1 19.2
12-m price range: RM1.60 Gross DPS (sen) 3.6 3.1 4.0 4.0 4.0
RM0.90 Dividend yield (%) 2.3% 1.9% 2.5% 2.5% 2.5%
3-m avg daily vol: 6.4m P/BV (x) 6.5 5.2 4.6 3.9 3.4
No. of shrs (m): 1,988 ROE (%) 19.7% 21.1% 20.1% 20.0% 19.0%
Est. free float (%): 58.8 Net cash per share (RM) 0.09 0.11 0.14 0.18 0.21
Conv. secs (m): None P/FCFE (x) 51.4 36.3 30.1 26.4 22.6
Major shareholders (%): EV/EBITDA (x) 26.2 20.7 17.8 15.0 13.3
- Ngau Boon Keat 26.8 % change in EPS estimates - - -
- EPF 14.4 CIMB/Consensus (x) 0.96 0.93 0.97
Source: Company, CIMB Research, Bloomberg
Debt raised/(repaid) 0 1 1 1 1
Equity raised/(repaid) 0 0 0 0 0
8.0
Dividends paid (44) (44) (44) (44) (73) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (19) (18) (21) (25) (23)
Cash flow from financing (63) (61) (64) (68) (95)
Change in cash 17 43 61 76 68
Change in net cash/(debt) 17 42 60 75 67
Ending net cash/(debt) 174 216 276 350 417
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
DiGi.com Bhd RM24.80 @07/12/10
Squeezing out more cost efficiencies Target: RM27.00
Telecommunications - Mobile
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 4,814.5 4,909.6 5,338.3 5,737.7 6,063.5
EBITDA (RM m) 2,158.7 2,115.1 2,348.9 2,581.9 2,789.2
EBITDA margins (%) 44.8% 43.1% 44.0% 45.0% 46.0%
Pretax profit (RM m) 1,546.9 1,366.5 1,545.2 1,732.2 1,934.2
Net profit (RM m) 1,140.7 1,000.5 1,158.9 1,299.2 1,450.7
EPS (sen) 146.7 128.7 149.1 167.1 186.6
EPS growth (%) 3.6% (12.3%) 15.8% 12.1% 11.7%
P/E (x) 16.9 19.3 16.6 14.8 13.3
Stock Information
Core EPS (sen) 146.7 128.7 149.1 167.1 186.6
Market cap: RM19,282m/US$6,147m Core EPS growth (%) 3.6% (12.3%) 15.8% 12.1% 11.7%
12-m price range: RM25.60 Core P/E (x) 16.9 19.3 16.6 14.8 13.3
RM21.00 Gross DPS (sen) 184.7 178.0 198.2 167.1 205.2
3-m avg daily vol: 0.3m Dividend yield (%) 7.4% 7.2% 8.0% 6.7% 8.3%
No. of shrs (m): 778 P/BV (x) 10.2 12.7 16.9 16.9 19.4
Est. free float (%): 47.5 ROE (%) 65.7% 58.5% 87.1% 114.1% 136.0%
Conv. secs (m): None Net gearing (%) 3.0% 31.6% 60.9% 57.8% 43.1%
Major shareholders (%): P/FCFE (x) 15.3 13.1 10.5 13.0 11.7
- Telenor 49.0 EV/EBITDA (x) 9.0 9.3 8.5 7.7 7.1
- EPF 16.0 % change in EPS estimates - - -
- Time dotCom 3.5 CIMB/Consensus (x) 1.03 1.09 1.15
Source: Company, CIMB Research, Bloomberg
24.9 2.00
products and services. After capturing among the highest net adds in 2007, DiGi’s
23.9
1.50
momentum slowed down as it focused on migrating its prepaid customers to postpaid.
22.9
21.9
1.00 As a result, its subscriber market share slipped from 28% at its peak in mid-07 to 26%
20.9
0.50 currently while its share of industry revenue remained unchanged yoy at 26%. At end-
19.9
De c -09 Ma y-10 Oct-10
0.00
07, DiGi acquired 3G spectrum by issuing 27.5m or 3.7% new DiGi shares to Time
Volume 1m (R.H.S ca le ) DiGi.com Bhd dotCom. Telenor pared its stake in Digi to 49% to comply with the regulatory limit. Digi
Source: Bloomberg was established in 1995 as Mutiara Telecom.
Equity raised/(repaid) 3 0 0 0 0
13.0
Dividends paid (1,501) (1,376) (1,447) (1,444) (1,418) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 24 (18) (22) (41) (37)
Cash flow from financing (1,376) (870) (869) (1,485) (1,455)
Change in cash (236) 99 387 36 230
Change in net cash/(debt) (333) (425) (213) 36 230
Ending net cash/(debt) (56) (481) (694) (658) (428)
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Eastern & Oriental Bhd RM1.14 @07/12/10
Takeover candiate? Target: RM1.63
Property Devt & Invt
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 302.6 352.4 395.0 526.1 656.8
EBITDA (RM m) 27.2 72.2 73.1 98.3 134.4
EBITDA margins (%) 9.0% 20.5% 18.5% 18.7% 20.5%
Pretax profit (RM m) (38.1) 93.7 68.8 101.9 117.0
Net profit (RM m) (37.7) 70.9 45.0 70.2 80.6
EPS (sen) (6.4) 9.3 5.7 8.8 10.1
EPS growth (%) (124.7%) 246.2% (39.3%) 56.0% 14.8%
P/E (x) nm 12.2 20.2 12.9 11.3
Core EPS (sen) (1.0) 6.4 5.7 8.8 10.1
Core EPS growth (%) (143.9%) 730.2% (11.1%) 56.0% 14.8%
Stock Information
Core P/E (x) nm 17.9 20.2 12.9 11.3
Market cap: RM940m/US$300m FD core EPS (sen) 1.0 6.4 5.7 8.0 8.9
12-m price range: RM1.25 FD core P/E (x) 118.9 17.9 20.0 14.3 12.8
RM0.86 Gross DPS (sen) 0.0 3.8 3.8 4.0 5.0
3-m avg daily vol: 3.6m Dividend yield (%) 0.0% 3.3% 3.3% 3.5% 4.4%
No. of shrs (m): 825 P/BV (x) 0.8 0.8 0.9 0.8 0.8
Est. free float (%): 67.1 ROE (%) (4.9%) 7.6% 4.3% 6.5% 7.1%
Conv. secs (m): 326.1 Net gearing (%) 80.5% 36.2% 50.1% 59.8% 58.0%
Major shareholders (%): P/FCFE (x) (2.7) 5.1 (25.1) (19.3) (136.6)
- Dato' Terry Tham Ka Hon 16.8 EV/EBITDA (x) 50.2 17.8 20.4 16.6 12.3
- G.K. Goh Holdings Limited 16.1 % change in EPS estimates N/A N/A N/A
- Halfmoon Bay Capital 10.4 CIMB/Consensus (x) 0.99 1.00 0.87
Source: Company, CIMB Research, Bloomberg
2.50
mergers. The now streamlined group has three core businesses, i.e. property
1.2
1.1
2.00 development, hospitality & lifestyle and property investment. E&O has over 1,400
1.0
1.50
acres of landbank in Kuala Lumpur and Penang Island. This includes 740 acres of
1.00
0.9 0.50
land to be reclaimed under Phase 2 of the Seri Tanjung Pinang project in Penang.
0.8
De c-09 Ma y-10 Oct-10
0.00
The group owns the heritage Eastern & Oriental Hotel and Lone Pine Hotel in
Volume 10m (R.H.S ca le ) Ea s te rn & Orie nta l Bhd Penang. E&O also has numerous small parcels of very prime landbank in the centre
Source: Bloomberg of Kuala Lumpur.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Eksons Corporation Bhd RM1.00 @07/12/10
Property is a new plank for earnings Target: RM1.26
Timber
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 291.1 279.1 348.7 367.8 382.3
EBITDA (RM m) 33.3 27.0 53.6 61.8 76.4
EBITDA margins (%) 11.4% 9.7% 15.4% 16.8% 20.0%
Pretax profit (RM m) 20.7 13.9 39.6 47.3 61.4
Stock Information Net profit (RM m) 26.0 17.4 34.9 42.1 54.2
EPS (sen) 15.8 10.6 21.3 25.6 33.0
Market cap: RM163m/US$52m EPS growth (%) (38.1%) (33.1%) 100.7% 20.5% 28.8%
12-m price range: RM1.13 P/E (x) 6.3 9.4 4.7 3.9 3.0
RM0.78 Gross DPS (sen) 2.7 4.1 5.9 7.1 9.2
3-m avg daily vol: 0.1m Dividend yield (%) 2.7% 4.2% 5.9% 7.1% 9.2%
No. of shrs (m): 164 P/BV (x) 0.5 0.5 0.4 0.4 0.4
Est. free float (%): 30.0 ROE (%) 8.6% 5.3% 9.8% 10.9% 12.7%
Conv. secs (m): None Net cash per share (RM) 0.32 0.09 0.31 0.57 0.89
Major shareholders (%): P/FCFE (x) 14.1 (5.9) 6.3 3.3 2.5
- Tay Hua Sin 46.9 EV/EBITDA (x) 3.9 6.3 2.5 1.5 0.5
- Faizal bin Abdul Aziz 12.3 % change in EPS estimates - - -
- EPF 1.8 CIMB/Consensus (x) 1.01 0.99 1.00
Source: Company, CIMB Research, Bloomberg
MALAYSIA
UNDERPERFORM Maintained
Fraser & Neave Holdings Bhd RM16.26 @07/12/10
Growth is fizzling out Target: RM11.05
Food & Beverages
Financial summary
FYE Sep 2009 2010 2011F 2012F 2013F
Revenue (RM m) 3,737.1 3,637.7 4,929.9 5,040.8 5,093.9
EBITDA (RM m) 453.0 519.4 454.7 465.2 481.2
EBITDA margins (%) 12.1% 14.3% 9.2% 9.2% 9.4%
Pretax profit (RM m) 299.8 776.1 362.7 373.0 384.4
Stock Information Net profit (RM m) 224.4 695.3 267.2 274.8 283.2
EPS (sen) 63.0 195.1 74.9 77.1 79.4
Market cap: RM5,832m/US$1,859m EPS growth (%) 34.5% 209.8% (61.6%) 2.8% 3.1%
12-m price range: RM16.26 P/E (x) 25.8 8.3 21.7 21.1 20.5
RM10.34 Gross DPS (sen) 53.4 182.7 53.4 53.4 53.4
3-m avg daily vol: 0.1m Dividend yield (%) 3.3% 11.2% 3.3% 3.3% 3.3%
No. of shrs (m): 359 P/BV (x) 5.8 4.4 5.1 5.1 5.1
Est. free float (%): 21.3 ROE (%) 21.9% 60.0% 21.8% 24.2% 24.8%
Conv. secs (m): None Net cash per share (RM) 0.18 1.13 0.96 1.23 1.51
Major shareholders (%): P/FCFE (x) 38.7 9.3 21.6 25.4 24.8
- Fraser and Neave Ltd 57.2 EV/EBITDA (x) 13.0 10.7 12.4 11.9 11.3
- Skim ASB 21.5 % change in EPS estimates - - -
- EPF 5.2 CIMB/Consensus (x) 0.93 0.94 0.99
Source: Company, CIMB Research, Bloomberg
14.8
0.80
F&N’s flagship product for decades but the non-renewal of agreements with TCCC
13.8 0.60 has prompted the company to accelerate the rollout of other products, especially
12.8
0.40 isotonic and Asian drinks, which have gained traction. Meanwhile, the dairy division
11.8
10.8
0.20 continues to enjoy the lion’s share of the local sweetened condensed milk market
9.8
De c -09 Ma y-10 Oct-10
0.00
after the RM310m acquisition of Nestle’s business in Feb 07. The Fraser Business
Volume 1m (R.H.S ca le ) Fra s e r & Ne a ve Holdings Bhd Park Phase 2 property development is nearing completion. In FY10, F&N disposed of
Source: Bloomberg its glass business.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Gamuda Bhd RM3.76 @07/12/10
Riding on the MRT Target: RM5.00
Construction
Financial summary
FYE Jul 2009 2010 2011F 2012F 2013F
Revenue (RM m) 2,727.3 2,455.1 3,106.7 4,107.8 4,587.9
EBITDA (RM m) 303.4 236.6 233.7 327.2 417.9
EBITDA margins (%) 11.1% 9.6% 7.5% 8.0% 9.1%
Pretax profit (RM m) 282.2 370.1 479.2 646.1 780.8
Net profit (RM m) 193.7 280.7 335.0 458.5 558.2
EPS (sen) 9.6 13.9 16.6 22.7 27.7
EPS growth (%) (33.8%) 44.9% 19.3% 36.9% 21.7%
Stock Information P/E (x) 39.1 27.0 22.6 16.5 13.6
Market cap: RM7,687m/US$2,443m FD core EPS (sen) 9.6 13.7 16.3 22.1 32.9
12-m price range: RM3.98 FD core P/E (x) 39.1 27.4 23.1 17.0 11.4
RM2.58 Gross DPS (sen) 7.9 12.0 12.0 12.0 12.0
3-m avg daily vol: 8.5m Dividend yield (%) 2.1% 3.2% 3.2% 3.2% 3.2%
No. of shrs (m): 2,045 P/BV (x) 3.7 4.1 3.7 3.6 3.4
Est. free float (%): 79.4 ROE (%) 8.2% 14.4% 17.2% 21.9% 25.6%
Conv. secs (m): 252.3 Net gearing (%) 41.1% 60.9% 51.4% 47.4% 43.7%
Major shareholders (%): P/FCFE (x) 30.0 109.4 225.9 (201.0) (151.5)
- EPF 8.3 EV/EBITDA (x) 28.5 37.9 38.2 27.2 21.3
- Amanah Raya Trustees 7.2 % change in EPS estimates - - -
- Platinum 5.2 CIMB/Consensus (x) 0.89 1.01 1.09
MALAYSIA
OUTPERFORM Maintained
Genting Bhd RM10.70 @07/12/10
Top gaming pick Target: RM15.20
Gaming
GENT MK / GENT.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 9,082.5 8,893.6 14,850.2 18,002.3 20,039.7
EBITDA (RM m) 3,470.1 3,776.3 6,508.2 7,958.6 8,595.2
EBITDA margins (%) 38.2% 42.5% 43.8% 44.2% 42.9%
Pretax profit (RM m) 1,733.1 2,528.4 4,301.6 5,893.2 6,564.9
Net profit (RM m) 567.6 1,044.3 2,229.5 2,974.1 3,458.6
EPS (sen) 15.3 28.2 60.2 80.3 93.4
EPS growth (%) (71.5%) 84.0% 113.5% 33.4% 16.3%
P/E (x) 69.8 38.0 17.8 13.3 11.5
Core EPS (sen) 45.9 36.7 65.7 80.3 93.4
Core EPS growth (%) 6.4% (20.2%) 79.3% 22.2% 16.3%
Stock Information
Core P/E (x) 23.3 29.2 16.3 13.3 11.5
Market cap: RM39,729m/US$12,665m Gross DPS (sen) 7.0 7.2 7.5 7.5 7.9
12-m price range: RM10.80 Dividend yield (%) 0.7% 0.7% 0.7% 0.7% 0.7%
RM6.22 P/BV (x) 3.2 2.9 2.5 2.1 1.8
3-m avg daily vol: 6.6m ROE (%) 4.6% 7.9% 15.0% 17.2% 17.0%
No. of shrs (m): 3,713 Net cash per share (RM) 0.97 0.32 0.38 1.95 3.58
Est. free float (%): 50.0 P/FCFE (x) 69.2 6.9 11.2 4.9 7.2
Conv. secs (m): None EV/EBITDA (x) 12.8 13.1 7.8 5.8 4.9
Major shareholders (%): % change in EPS estimates - - -
- Lim family 39.6 CIMB/Consensus (x) 1.39 1.08 1.13
Source: Company, CIMB Research, Bloomberg
MALAYSIA
NEUTRAL Maintained
Genting Malaysia Bhd RM3.34 @07/12/10
A dicey bet Target: RM3.90
Gaming
GENM MK / GENM.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 4,886.7 4,991.8 5,134.4 7,003.3 7,688.1
EBITDA (RM m) 2,034.5 2,038.7 1,932.5 2,165.7 2,309.1
EBITDA margins (%) 41.6% 40.8% 37.6% 30.9% 30.0%
Pretax profit (RM m) 1,125.3 1,764.5 1,617.3 1,941.0 2,081.5
Net profit (RM m) 632.7 1,323.6 1,229.6 1,403.1 1,530.7
EPS (sen) 10.8 22.4 20.8 23.8 25.9
EPS growth (%) (60.8%) 107.9% (7.1%) 14.1% 9.1%
P/E (x) 31.0 14.9 16.0 14.1 12.9
Core EPS (sen) 23.8 23.5 22.7 23.8 25.9
Core EPS growth (%) 18.1% (1.3%) (3.3%) 4.7% 9.1%
Stock Information
Core P/E (x) 14.1 14.2 14.7 14.1 12.9
Market cap: RM19,756m/US$6,298m Gross DPS (sen) 7.0 7.3 7.9 7.9 8.2
12-m price range: RM3.64 Dividend yield (%) 2.1% 2.2% 2.4% 2.4% 2.5%
RM2.51 P/BV (x) 2.4 1.9 1.8 1.6 1.5
3-m avg daily vol: 7.4m ROE (%) 7.7% 14.3% 11.5% 11.9% 11.9%
No. of shrs (m): 5,915 Net gearing (%) N/A N/A N/A N/A N/A
Est. free float (%): 50.0 Net cash per share (RM) 0.77 0.89 1.08 1.28 1.47
Conv. secs (m): None P/FCFE (x) 10.8 18.3 13.6 13.0 12.9
Major shareholders (%): EV/EBITDA (x) 7.4 7.1 6.9 5.6 4.8
- Genting Berhad 47.3 % change in EPS estimates - - -
- First Eagle Investment 3.6 CIMB/Consensus (x) 1.01 0.97 0.97
Source: Company, CIMB Research, Bloomberg
3.5
7.00 Genting Bhd. Its principal business is the operation of Resorts World Genting, an
6.00
3.3
3.1
5.00 integrated resort and casino located 45mins from Kuala Lumpur. The resort consists
4.00
2.9
3.00 of six hotels and two apartment blocks, offering a total of over 10,000 rooms. The
2.7
2.5
2.00
1.00
Genting casino has over 400 gaming tables and 3,500 slot machines. It recently
2.3
De c-09 Ma y-10 Oct-10
0.00
completed the acquisition of Genting Singapore’s UK casino assets and is in the midst
Volume 10m (R.H.S ca le ) Ge nting Ma la ys ia Bhd of rolling out its maiden venture in Aqueduct in US. GM also holds just under 20%
Source: Bloomberg interest in Genting Hong Kong, the third largest cruise operator in the world and the
joint operator of the newly opened Resorts World Manila in the Philippines.
Cash flow from investing 121 (532) (400) (400) (404) 10.0
Debt raised/(repaid) (175) 0 0 0 0 9.0
Equity raised/(repaid) 0 (74) 0 0 0
8.0
Dividends paid (288) (300) (350) (350) (368) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 105 78 106 128 151
Cash flow from financing (358) (296) (244) (222) (217)
Change in cash 1,519 703 1,105 1,167 1,157
Change in net cash/(debt) 1,694 703 1,105 1,167 1,157
Ending net cash/(debt) 4,573 5,276 6,381 7,548 8,705
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Genting Plantations Bhd RM8.68 @07/12/10
Planting roots in Indonesia Target: RM9.84
Palm Oil & Rubber
GENP MK / GENP.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 1,036.0 755.6 932.5 1,043.7 1,126.3
EBITDA (RM m) 488.1 312.5 456.3 523.1 549.2
EBITDA margins (%) 47.1% 41.4% 48.9% 50.1% 48.8%
Pretax profit (RM m) 482.9 301.9 446.3 503.0 529.9
Net profit (RM m) 373.3 235.7 326.0 377.3 397.4
EPS (sen) 49.3 31.1 43.1 49.9 52.5
Stock Information EPS growth (%) 8.4% (36.9%) 38.3% 15.7% 5.3%
Market cap: RM6,587m/US$2,100m P/E (x) 17.6 27.9 20.1 17.4 16.5
12-m price range: RM8.95 Gross DPS (sen) 10.0 9.0 9.0 9.0 16.0
RM6.00 Dividend yield (%) 1.2% 1.0% 1.0% 1.0% 1.8%
3-m avg daily vol: 0.9m P/BV (x) 2.8 2.6 2.3 2.1 1.9
No. of shrs (m): 759 ROE (%) 17.0% 9.7% 12.1% 12.6% 12.0%
Est. free float (%): 32.4 Net cash per share (RM) 0.66 0.61 0.74 0.94 1.25
Conv. secs (m): None P/FCFE (x) 49.4 31.7 43.3 32.6 20.7
Major shareholders (%): EV/EBITDA (x) 12.5 19.7 13.3 11.3 10.3
- Genting 53.8 % change in EPS estimates - - -
- Employees Provident Fund 13.8 CIMB/Consensus (x) 0.98 1.02 0.97
Source: Company, CIMB Research, Bloomberg
7.7 3.00 company was incorporated on 29 Sep 1977 to spearhead Genting's plantation
7.2
2.00 business. It was listed on Bursa Malaysia on 30 Aug 1982. This midsized plantation
6.7
6.2
1.00 company has 87,147ha of planted oil palm estates located in Malaysia (69%) and
5.7
De c-09 Ma y-10 Oct-10
0.00
Indonesia (31%). It also has property development projects in Johor, Kedah and
Volume 1m (R.H.S c a le ) Ge nting P la nta tions Bhd Melaka. The group also owns Asiatic Centre for Genome Technology (ACGT) which
Source: Bloomberg focuses on R&D in genome sequencing and biomarker discovery that will lead to
innovations for enhancing the productivity and sustainability of palm oil production.
MALAYSIA
NEUTRAL Maintained
Guinness Anchor Bhd RM9.96 @07/12/10
More reason for cheer Target: RM10.45
Brewers
GUIN MK / GUMS.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
• Maintain NEUTRAL. As a leader in the Malaysian malt liquor industry with a solid
product portfolio and marketing prowess, GAB is well-positioned to ride on the
improving industry fundamentals. Its valuations are arguably not cheap as its 17.0x
FY12 P/E stands at a 33% premium over its 3-year historical average of 12.8x. But
investors should be compensated by an attractive gross yield of 6-7%. We remain
NEUTRAL on the stock despite a higher DDM-based target price of RM10.45
(RM8.85 previously) after lowering our cost of equity from 8% to 7% for a cut in the
beta assumption from 0.6x to 0.4x. Our FY10-12 earnings projections are intact.
• To remain the market leader in 2011? We think that brand investments will
continue to be one of GAB’s key strategies for retaining its leadership position in the
Malaysian malt liquor market (MLM) in 2011. Given its solid brand portfolio which
includes Tiger, Heineken, Guinness and Anchor, and its marketing prowess,
keeping its market dominance should not be a problem. But competition will
undeniably heighten, especially in the imported beer segment. Sales of premium
beer imported by its rival Carlsberg Brewery (CAB MK; Neutral) via Luen Heng
Agency are picking up, posing a threat to GAB’s premium beer brands such as
Heineken.
• Improving growth prospects and attractive dividends. The reprieve from an
excise duty hike in the latest Budget should pave the way for further volume growth.
Besides improving earnings growth prospects, GAB’s other key appeal remains its
high gross yield of 6-7%, which should lend support to the share price.
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,285.4 1,341.7 1,390.1 1,432.2 1,475.7
EBITDA (RM m) 217.4 234.5 256.6 264.7 272.9
EBITDA margins (%) 16.9% 17.5% 18.5% 18.5% 18.5%
Pretax profit (RM m) 191.2 205.0 227.6 236.0 244.2
Stock Information Net profit (RM m) 142.0 152.7 170.7 177.0 183.2
EPS (sen) 47.0 50.5 56.5 58.6 60.6
Market cap: RM3,009m/US$956m EPS growth (%) 12.8% 7.5% 11.8% 3.7% 3.5%
12-m price range: RM9.96 P/E (x) 21.2 19.7 17.6 17.0 16.4
RM6.60 Gross DPS (sen) 54.5 60.0 64.5 67.0 69.0
3-m avg daily vol: 0.1m Dividend yield (%) 5.5% 6.0% 6.5% 6.7% 6.9%
No. of shrs (m): 302 P/BV (x) 6.8 6.4 6.1 5.8 5.5
Est. free float (%): 30.0 ROE (%) 33.3% 33.4% 35.3% 34.8% 34.3%
Conv. secs (m): None Net cash per share (RM) 0.54 0.50 0.57 0.64 0.70
Major shareholders (%): P/FCFE (x) 32.9 27.3 18.7 18.2 17.4
- GAPL Pte Ltd 51.0 EV/EBITDA (x) 13.1 12.2 11.1 10.6 10.2
- Aberdeen Asset Mgmt 6.0 % change in EPS estimates - - -
- Vontobel Asset Mgmt 1.5 CIMB/Consensus (x) 1.04 1.03 1.01
Source: Company, CIMB Research, Bloomberg
7.7
2.00
been gradually increasing in recent years to around 57% currently. Anchoring this
7.2
6.7
1.00 market share expansion is the growth of its blond beers, led by Tiger, Heineken and
6.2
De c -09 Ma y-10 Oct-10
0.00
Anchor. GAB remains the market leader by far in the stout market via its flagship
Volume 100k (R.H.S c a le ) Guinne s s Anchor Bhd Guinness Stout. It also carries other imported brands such as Strongbow, Paulaner
Source: Bloomberg and Sol.
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Hap Seng Plantations Holdings RM3.15 @07/12/10
Richest dividend pickings among planters Target: RM3.73
Palm Oil & Rubber
HAPL MK / HAPP.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
• Maintain TRADING BUY and target price of RM3.50. We continue to rate Hap
Seng Plant (HSP) a TRADING BUY due to its attractive P/E valuations and strong
dividend yields. Recent purchases of its shares by its major shareholder are a vote
of confidence in the company. We are leaving our EPS forecasts untouched but are
raising our target price from RM3.50 to RM3.73 as we impute a higher target P/E of
16x instead of 15x in view of the more bullish outlook. The target P/E is still at a
slight discount to the target P/Es of 17-18x accorded to the large-cap planters, in
view of HSP’s lower liquidity.
• A stronger year beckons. We expect stronger FFB production and higher selling
prices to boost 2011 results. We project a 15% improvement in HSP’s 2011 net
profit, coming from higher selling prices, increased production and lower operating
costs per tonne. Production should pick up in 2011 when the impact of poor
weather in the previous year wears off. However, the group will have to contend
with the issue of shortage of foreign estate workers though it does have a slight
advantage over its peers due to its more comprehensive facilities for its workers.
• Major shareholder increasing stake. Hap Seng Consolidated (HAP MK; Not
Rated) has been raising its stake in HSP, which is positive news as it suggests that
the major shareholder sees value in HSP at this level. We estimate that it bought
7.856m shares between 2 and 19 November 2010, raising its stake in HSP by
around 1% to 52.53%.
Financial summary
FYE Dec 2009 2010F 2011F 2012F
Revenue (RM m) 373.1 432.4 473.4 482.8
EBITDA (RM m) 160.5 242.5 275.7 276.9
EBITDA margins (%) 43.0% 56.1% 58.2% 57.4%
Pretax profit (RM m) 135.1 217.5 249.4 248.8
Net profit (RM m) 100.7 163.1 187.1 186.6
EPS (sen) 12.6 20.4 23.4 23.3
EPS growth (%) (29.5%) 62.0% 14.7% (0.2%)
Stock Information
P/E (x) 25.0 15.4 13.5 13.5
Market cap: RM2,520m/US$803m Gross DPS (sen) 12.6 16.3 18.7 18.7
12-m price range: RM3.15 Dividend yield (%) 4.0% 5.2% 5.9% 5.9%
RM2.04 P/BV (x) 1.5 1.5 1.4 1.4
3-m avg daily vol: 1.0m ROE (%) 6.1% 9.7% 10.8% 10.3%
No. of shrs (m): 800 Net gearing (%) 1.5% 0.0% N/A N/A
Est. free float (%): 34.2 Net cash per share (RM) N/A N/A 0.02 0.09
Conv. secs (m): None P/FCFE (x) 11.2 15.6 17.2 18.8
Major shareholders (%): EV/EBITDA (x) 15.9 10.4 9.1 8.8
- Hap Seng Consolidated 52.5 % change in EPS estimates - -- -
- Innoprise 15.0 CIMB/Consensus (x) 1.02 0.92 0.88
Source: Company, CIMB Research, Bloomberg
2.7 3.00 operations. As at 31 December 2009, it owned 34,467ha of planted oil palm estates in
2.5
2.00 Sabah, East Malaysia. Its estates are mostly located in Kinabatangan, which we
2.3
2.1
1.00 believe is one of the most fertile regions for oil palm in Sabah. On top of that, 96% of
1.9
De c-09 Ma y-10 Oct-10
0.00
its estates are located in one contiguous block, allowing the group to achieve better
Volume 1m (R.H.S ca le ) Ha p S e ng P la nta tions Holdings economies of scale. Approx. 87% of its total landbank of 39,803ha is planted with oil
Source: Bloomberg palms and 8.8% is reserved for infrastructure and nurseries.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Hartalega Holdings RM5.39 @07/12/10
Hands down the best Target: RM8.43
Rubber Gloves
• Still an OUTPERFORM. In view of volatile natural rubber latex prices and customer
preference for protein-free synthetic nitrile gloves, Hartalega remains our top pick
as Malaysia’s largest nitrile glovemaker. We retain our EPS forecasts. Although we
also retain our valuation basis of 10% discount to our target market P/E, our target
price rises from RM8.03 to RM8.43 because of an upgrade of our target market P/E
from 13.8x to 14.5x. Potential re-rating catalysts include 1) better operating
efficiency, 2) higher output from refurbished lines, and 3) higher ASPs from selling
higher quality gloves.
• The reliable and efficient glovemaker. With 80% of sales coming from nitrile
gloves, Hartalega avoids the vagaries of the rubber latex market, which is highly
unpredictable due to weather and speculative financial flows. Furthermore,
Hartalega’s high level of automation and innovative culture lead us to believe that it
will maintain its 35% EBITDA margin over our FY11-13 forecast period.
• Large valuation gap. Hartalega trades at a single-digit P/E of 8.1x, which, in our
view, is unjustified given its 32% ROE and 18% 3-year EPS CAGR. We believe the
gap between Hartalega’s 8.1x multiple and our 14.5x target P/E will reduce as
investors increasingly appreciate its growth potential and sound fundamentals.
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 443.2 571.9 711.5 821.7 899.4
EBITDA (RM m) 107.9 202.7 254.2 295.1 329.1
EBITDA margins (%) 24.3% 35.4% 35.7% 35.9% 36.6%
Pretax profit (RM m) 95.5 177.8 231.1 269.8 301.7
Net profit (RM m) 84.5 142.9 184.7 215.7 241.1
EPS (sen) 23.3 39.3 50.8 59.3 66.3
EPS growth (%) 21.5% 69.1% 29.3% 16.8% 11.8%
P/E (x) 23.2 13.7 10.6 9.1 8.1
Stock Information Core EPS (sen) 21.9 40.0 50.8 59.3 66.3
Core EPS growth (%) 14.7% 82.2% 27.1% 16.8% 11.8%
Market cap: RM1,959m/US$625m Core P/E (x) 24.6 13.5 10.6 9.1 8.1
12-m price range: RM5.63 Gross DPS (sen) 8.0 13.3 17.3 20.7 24.0
RM3.84 Dividend yield (%) 1.5% 2.5% 3.2% 3.8% 4.5%
3-m avg daily vol: 0.5m P/BV (x) 7.7 5.5 4.0 3.0 2.4
No. of shrs (m): 363 ROE (%) 39.0% 47.0% 43.7% 37.8% 32.6%
Est. free float (%): 37.7 Net gearing (%) 7.7% N/A N/A N/A N/A
Conv. secs (m): None Net cash per share (RM) N/A 0.09 0.30 0.65 0.91
Major shareholders (%): P/FCFE (x) 52.8 23.7 21.1 11.7 14.1
- Hartalega Industries Sdn 50.4 EV/EBITDA (x) 18.3 9.5 7.3 5.8 5.0
- Budi Tenggara Sdn Bhd 7.4 % change in EPS estimates N/A N/A N/A
- Kelana Citra Sdn Bhd 4.5 CIMB/Consensus (x) 1.02 1.06 1.02
Source: Company, CIMB Research, Bloomberg
4.00
gloves. The group began its manufacturing operations in 1988 and in the same year,
5.1
3.00
made its foray into the overseas market by exporting to the US. Since inception,
4.6
2.00 Hartalega has been focusing on R&D on automation systems to improve the
4.1
1.00 production efficiency and effectiveness of the group’s glove manufacturing operations.
3.6
Dec-09 May-10 Oct-10
0.00
It currently owns five manufacturing plants on a 25-acre site in Batang Berjuntai,
Volume 1m (R.H.Scale) Hartalega Holdings Selangor, which offers room for expansion.
Source: Bloomberg
Cash flow from investing (61) (67) (100) (100) (100) 4.0
Debt raised/(repaid) 14 (15) (14) (12) (10) 3.0
Equity raised/(repaid) 0 0 0 0 0
2.0
Dividends paid (8) (45) (31) (53) (58) Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (1) 0 (1) 1 2
Cash flow from financing 4 (59) (45) (64) (66)
Change in cash 27 38 61 116 83
Change in net cash/(debt) 13 53 75 128 93
Ending net cash/(debt) (19) 33 108 236 330
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
IJM Corp Bhd RM6.14 @07/12/10
Stoked by a merger play Target: RM6.95
Construction
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 4,601.3 4,013.5 4,961.1 5,354.0 5,656.1
EBITDA (RM m) 618.8 567.5 747.7 775.2 814.1
EBITDA margins (%) 13.4% 14.1% 15.1% 14.5% 14.4%
Pretax profit (RM m) 528.7 578.0 516.1 540.9 572.9
Net profit (RM m) 290.2 332.6 377.8 393.4 417.0
EPS (sen) 22.0 24.6 27.9 29.1 30.8
EPS growth (%) 147.9% 11.7% 13.6% 4.1% 6.0%
P/E (x) 27.9 25.0 22.0 21.1 19.9
Core EPS (sen) 22.0 21.5 27.9 29.1 30.8
Core EPS growth (%) 9.8% (2.4%) 30.0% 4.1% 6.0%
Core P/E (x) 27.9 28.6 22.0 21.1 19.9
Stock Information
FD core EPS (sen) 20.4 20.0 25.9 27.0 46.6
Market cap: RM8,295m/US$2,636m FD core P/E (x) 30.1 30.8 23.7 22.8 13.2
12-m price range: RM6.14 Gross DPS (sen) 24.9 10.7 10.7 10.7 10.7
RM4.30 Dividend yield (%) 4.1% 1.7% 1.7% 1.7% 1.7%
3-m avg daily vol: 4.2m P/BV (x) 3.4 3.6 3.5 3.5 3.7
No. of shrs (m): 1,351 ROE (%) 12.4% 14.2% 16.1% 16.6% 18.0%
Est. free float (%): 67.2 Net gearing (%) 80.6% 91.1% 82.3% 86.8% 91.1%
Conv. secs (m): 159 P/FCFE (x) 44.6 40.5 34.6 33.4 31.7
Major shareholders (%): EV/EBITDA (x) 16.9 19.1 14.4 14.0 13.4
- EPF 16.2 % change in EPS estimates - - -
- Zelan 5.3 CIMB/Consensus (x) 0.93 0.82 0.76
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
IOI Corporation Bhd RM5.78 @07/12/10
Less fruitful than peers Target: RM6.54
Palm Oil & Rubber
IOI MK / IOIB.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
• Maintain NEUTRAL with a higher target price of RM6.54. We continue to rate IOI
Corp a NEUTRAL as the earnings upside from our more upbeat view on CPO price
is offset by the stock’s rich valuations and slower output growth relative to its peers.
Our earnings forecasts remain intact. However, we are raising our target price from
RM6.05 to RM6.54 as we up our target forward P/E from 17x to 18x, in line with our
upward revision of our target market P/E. Our new target price is based on a 25%
premium over our target market P/E of 14.5x in view of the strong liquidity of its
shares. For exposure to the sector, we prefer KL Kepong.
• Higher CPO price to drive 2011 earnings. We expect FY11 core earnings to jump
17%, thanks to higher CPO selling prices, stronger FFB production as the weather
normalises and better earnings contribution from its Singapore property projects.
There could be more upside to our earnings numbers if the group scoops up
earnings-accretive acquisitions.
• Beneficiary of recovering CPO price. We are more upbeat on 2011 CPO price in
view of the potential tightness in CPO supplies and strengthening of the ongoing La
Nina event, which may crimp soybean harvests from South America. Approximately
62% of IOI Corp’s earnings come from its upstream plantation division, which will
benefit from the recovering CPO price. Our sensitivity analysis suggests a 4%
earnings impact from every RM100/tonne change in CPO price.
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 14,600.4 12,543.0 16,369.6 17,519.7 18,475.7
EBITDA (RM m) 1,954.3 2,879.7 3,024.3 3,300.2 3,436.8
EBITDA margins (%) 13.4% 23.0% 18.5% 18.8% 18.6%
Pretax profit (RM m) 1,550.5 2,550.6 2,757.8 3,108.6 3,327.9
Net profit (RM m) 983.9 2,035.7 2,090.8 2,345.8 2,511.2
EPS (sen) 15.1 31.3 31.3 35.1 37.6
EPS growth (%) (55.9%) 107.2% 0.0% 12.2% 7.1%
P/E (x) 38.3 18.5 18.5 16.5 15.4
Core EPS (sen) 22.2 24.3 29.9 35.1 37.6
Core EPS growth (%) (26.5%) 9.7% 23.1% 17.2% 7.1%
Core P/E (x) 26.1 23.8 19.3 16.5 15.4
FD core EPS (sen) 21.8 24.0 29.4 34.3 36.7
Stock Information
FD core P/E (x) 26.5 24.1 19.7 16.8 15.7
Market cap: RM38,698m/US$12,336m Gross DPS (sen) 9.1 20.8 20.0 23.4 25.0
12-m price range: RM5.97 Dividend yield (%) 1.6% 3.6% 3.5% 4.0% 4.3%
RM4.69 P/BV (x) 4.4 3.5 3.1 2.8 2.4
3-m avg daily vol: 8.0m ROE (%) 11.8% 21.3% 18.1% 17.9% 16.9%
No. of shrs (m): 6,695 Net gearing (%) 35.3% 8.0% N/A N/A N/A
Est. free float (%): 58.8 Net cash per share (RM) N/A N/A 0.11 0.26 0.44
Conv. secs (m): 253.5 P/FCFE (x) (172.5) 17.3 8.1 20.2 22.1
Major shareholders (%): EV/EBITDA (x) 20.1 12.7 12.2 10.8 9.9
- Progressive Holdings Sdn 41.8 % change in EPS estimates - - -
- Employees Provident Fund 13.8 CIMB/Consensus (x) 0.96 1.02 1.00
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
JCY International RM0.80 @07/12/10
A dislocated disk Target: RM0.92
Technology Components
Financial summary
FYE Sep 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,758.0 2,044.6 2,112.3 2,439.7 2,701.9
EBITDA (RM m) 287.5 296.9 280.2 354.2 413.2
EBITDA margins (%) 16.4% 14.5% 13.3% 14.5% 15.3%
Pretax profit (RM m) 205.9 184.3 169.5 225.6 267.8
Net profit (RM m) 207.3 176.4 168.8 224.7 266.8
EPS (sen) 10.1 8.6 8.3 11.0 13.0
EPS growth (%) 2.2% (14.9%) (4.3%) 33.1% 18.7%
P/E (x) 7.9 9.3 9.7 7.3 6.1
Core EPS (sen) 10.1 9.3 8.3 11.0 13.0
Core EPS growth (%) 2.2% (8.0%) (11.4%) 33.1% 18.7%
Core P/E (x) 7.9 8.6 9.7 7.3 6.1
Stock Information
Gross DPS (sen) 5.1 3.9 4.1 5.5 6.5
Market cap: RM1,636m/US$521m Dividend yield (%) 6.3% 4.9% 5.2% 6.9% 8.2%
12-m price range: RM1.95 P/BV (x) 2.0 1.9 1.7 1.5 1.4
RM0.78 ROE (%) 25.5% 21.0% 18.3% 22.0% 23.3%
3-m avg daily vol: 7.2m Net gearing (%) N/A 24.5% 21.5% 16.9% 10.6%
No. of shrs (m): 2,045 Net cash per share (RM) 0.03 N/A N/A N/A N/A
Est. free float (%): 24.0 P/FCFE (x) 10.4 (58.0) 70.6 11.9 8.7
Conv. secs (m): None EV/EBITDA (x) 5.5 6.2 6.6 5.1 4.3
Major shareholders (%): % change in EPS estimates N/A N/A N/A
- Yong Yoon Kiong 76.0 CIMB/Consensus (x) 0.65 0.71 0.77
Source: Company, CIMB Research, Bloomberg
1.7
6.00
5.00
(HDD) mechanical components, with manufacturing facilities in Malaysia, Thailand
1.5 4.00 and China. Its principal activities include the manufacturing of base plates, top cover
1.3
1.1
3.00
2.00
assembly, actuator pivot flex assembly (APFA) and antidiscs, which are key
0.9 1.00 components of HDDs. JCY typically develops these components jointly with its HDD
0.7
Fe b-10 Ma y-10 Aug-10 Nov-10
0.00 customers.
Volume 10m (R.H.S ca le ) J CY Inte rna tiona l Bhd
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
JobStreet Corp Bhd RM2.88 @07/12/10
Doing a better job through more marketing Target: RM3.73
Technology - Others
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 102.3 92.3 111.5 125.9 140.0
EBITDA (RM m) 47.2 36.9 47.3 54.5 61.0
EBITDA margins (%) 46.2% 40.0% 42.4% 43.3% 43.6%
Pretax profit (RM m) 39.9 35.6 50.6 61.9 69.6
Net profit (RM m) 32.8 26.7 37.5 46.5 51.9
EPS (sen) 10.6 8.6 11.9 14.8 16.5
EPS growth (%) 12.6% (18.7%) 38.7% 23.8% 11.8%
P/E (x) 27.2 33.4 24.1 19.5 17.4
Stock Information
Core EPS (sen) 12.5 8.6 11.9 14.8 16.5
Market cap: RM916m/US$292m Core EPS growth (%) 30.6% (31.0%) 38.7% 23.8% 11.8%
12-m price range: RM3.00 Core P/E (x) 23.1 33.4 24.1 19.5 17.4
RM1.41 Gross DPS (sen) 4.7 4.0 7.8 9.6 10.8
3-m avg daily vol: 0.1m Dividend yield (%) 1.6% 1.4% 2.7% 3.3% 3.7%
No. of shrs (m): 318 P/BV (x) 8.2 7.1 6.2 5.4 4.7
Est. free float (%): 15.5 ROE (%) 33.8% 22.6% 27.7% 29.7% 28.7%
Conv. secs (m): None Net cash per share (RM) 0.16 0.17 0.19 0.26 0.34
Major shareholders (%): P/FCFE (x) 134.5 77.7 33.5 19.6 17.8
- Seek 22.4 EV/EBITDA (x) 17.8 22.8 18.0 15.2 13.2
- Fidelity 12.0 % change in EPS estimates N/A N/A N/A
- Mark Chang 10.7 CIMB/Consensus (x) 1.02 1.03 1.00
Source: Company, CIMB Research, Bloomberg
MALAYSIA
NEUTRAL Maintained
JT International Bhd RM6.03 @07/12/10
Keeping the fire alive Target: RM6.35
Tobacco
RJR MK / JTIN.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 1,038.5 1,158.2 1,223.5 1,297.3 1,317.4
EBITDA (RM m) 147.7 163.7 173.1 183.8 188.6
EBITDA margins (%) 14.2% 14.1% 14.2% 14.2% 14.3%
Pretax profit (RM m) 134.1 143.6 154.8 166.5 172.7
Stock Information Net profit (RM m) 98.2 108.3 114.6 123.2 127.8
EPS (sen) 37.5 41.4 43.8 47.1 48.9
Market cap: RM1,577m/US$501m EPS growth (%) 21.1% 10.3% 5.8% 7.5% 3.7%
12-m price range: RM6.15 P/E (x) 16.1 14.6 13.8 12.8 12.3
RM4.78 Gross DPS (sen) 67.8 30.0 30.0 30.0 35.0
3-m avg daily vol: 0.0m Dividend yield (%) 11.3% 5.0% 5.0% 5.0% 5.8%
No. of shrs (m): 262 P/BV (x) 3.4 5.0 4.2 3.6 3.2
Est. free float (%): 30.0 ROE (%) 20.5% 27.8% 33.4% 30.5% 27.5%
Conv. secs (m): None Net cash per share (RM) 1.02 0.48 0.65 0.88 1.10
Major shareholders (%): P/FCFE (x) 13.8 14.0 15.1 13.3 13.6
- JT International BV 60.4 EV/EBITDA (x) 8.9 8.9 8.1 7.3 6.8
- EPF 7.4 % change in EPS estimates - - -
- PNB 5.1 CIMB/Consensus (x) 0.94 0.96 0.96
Source: Company, CIMB Research, Bloomberg
2.00
Previously known as RJ Reynolds until the takeover of RJR’s global brands by JTI, it
5.3
5.1
1.50 is the second biggest player in the Malaysian tobacco industry, which is dominated by
4.9
4.7
1.00
0.50
British American Tobacco (BAT). JTI’s portfolio of brands includes Winston, Mild
4.5
De c-09 Ma y-10 Oct-10
0.00
Seven, Salem, Camel, More and Mine. While BAT is ahead of JTI in terms of total
Volume 100k (R.H.S ca le ) J T Inte rna tiona l Bhd market share, JTI dominates the value-for-money (VFM) segment via its Winston
Source: Bloomberg brand.
Cash flow from investing (12) (38) (23) (24) (24) 10.0
Debt raised/(repaid) 0 0 0 0 0
9.5
Equity raised/(repaid) 0 (196) 0 0 0
9.0
Dividends paid (131) (59) (59) (59) (59) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 0 10 4 6 7
Cash flow from financing (131) (245) (55) (53) (52)
Change in cash (17) (142) 46 59 57
Change in net cash/(debt) (17) (142) 46 59 57
Ending net cash/(debt) 267 125 171 230 287
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Kencana Petroleum Bhd RM2.01 @07/12/10
Drilling for more growth Target: RM2.60
Oil & Gas - Equipment & Svs
• Maintain OUTPERFORM. We maintain our forecasts but raise our target price
from RM2.28 to RM2.60, pegged to a revised target market P/E of 14.5x (13.8x
previously). Kencana remains an OUTPERFORM, with the potential re-rating
triggers being 1) active order book replenishment, 2) a new JV partner and 3) M&A.
• RM2.1bn order book and rising. Management has been consistently delivering its
promise to expand the order book. YTD, Kencana has secured 13 new contracts,
worth a collective RM1bn, taking its outstanding order book to RM2.1bn. The all-
time high is RM2.8bn recorded in Oct-Dec 08. The company is eyeing sizeable
deals worth a collective RM5.2bn in Malaysia and at least US$300m in India.
• KM1 extends Kencana’s expertise. Drilling rig KM1 is on a 5-year, RM729m
Petronas Carigali drilling contract which accounts for 34% of Kencana’s current
orders. The contract commenced on 2 Sep 10 and the rig started drilling in the final
week of Sep at a daily charter rate of US$130,000/day, higher than the average
global rate of US$115,628/day. Kencana is the first Malaysian company to build,
own and operate a drilling rig. KM1 could be the start of more rigs to come.
• A JV partner in McDermott? We understand that McDermott may surface as a JV
partner of Kencana. Kencana could be interested in working with McDermott to
build a pipeline installation business after its attempt with US-based Global failed.
Following the breakdown of the JV with Global in May, Kencana has maintained its
interest in owning and operating pipelay barges, either by going it alone or by roping
in a partner.
Financial summary
FYE Jul 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,140.8 1,089.7 1,702.5 2,686.0 3,146.0
EBITDA (RM m) 174.9 196.7 310.5 373.1 396.1
EBITDA margins (%) 15.3% 18.1% 18.2% 13.9% 12.6%
Pretax profit (RM m) 153.1 171.3 302.4 364.4 387.9
Net profit (RM m) 118.5 135.8 213.2 270.8 279.3
EPS (sen) 13.1 10.1 12.9 16.3 16.8
EPS growth (%) 39.0% (23.1%) 27.4% 27.0% 3.1%
Stock Information
P/E (x) 15.3 19.9 15.6 12.3 11.9
Market cap: RM3,335m/US$1,063m Gross DPS (sen) 1.5 1.5 2.5 3.5 4.5
12-m price range: RM2.10 Dividend yield (%) 0.7% 0.7% 1.2% 1.7% 2.2%
RM1.27 P/BV (x) 8.0 10.7 10.6 9.7 9.1
3-m avg daily vol: 8.6m ROE (%) 51.2% 56.5% 75.3% 82.6% 78.8%
No. of shrs (m): 1,659 Net gearing (%) 7.9% 3.8% N/A N/A N/A
Est. free float (%): 53.0 Net cash per share (RM) N/A N/A 0.00 0.01 0.01
Conv. secs (m): None P/FCFE (x) 80.5 89.9 63.7 47.6 38.4
Major shareholders (%): EV/EBITDA (x) 10.5 13.8 10.7 8.9 8.4
- Khasera Baru Sdn Bhd 38.6 % change in EPS estimates - - -
- EPF 8.4 CIMB/Consensus (x) 1.02 1.07 1.02
Source: Company, CIMB Research, Bloomberg
2.00
bid for fabrication contracts tendered by production-sharing contractors in Malaysia.
1.6 1.50 At present, the company’s yard in Lumut spans 169 acres with capacity of 60,000
1.00
1.4
0.50
tonnes p.a. Its covered yard space of 30,000 sq m allows the welders to work 24/7 in
1.2
De c-09 Ma y-10 Oct-10
0.00
all weather conditions. In CY08, Kencana started the fabrication of its first drilling rig
Volume 10m (R.H.S ca le ) Ke nca na P e trole um Bhd KM1. The company also owns two AHTS vessels, namely 67%-owned 5,500HP KPV
Source: Bloomberg Kapas and wholly-owned 8,080HP KPV Gemia.
Cash flow from investing (35) (31) (27) (22) (19) 7.0
Debt raised/(repaid) (3) 2 1 2 2 6.0
Equity raised/(repaid) 0 0 0 0 1
5.0
Dividends paid (14) (20) (41) (58) (75) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (254) (266) (351) (366) (371)
Cash flow from financing (271) (285) (392) (422) (442)
Change in cash 9 10 11 12 13
Change in net cash/(debt) 12 8 10 10 11
Ending net cash/(debt) (18) (10) 0 10 21
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
KLCC Property Holdings Bhd RM3.53 @07/12/10
Switch to REITs or developers Target: RM3.03
Property Investment
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 861.2 881.3 917.8 1,003.2 1,148.0
EBITDA (RM m) 661.0 683.0 739.3 777.2 833.2
EBITDA margins (%) 76.7% 77.5% 80.6% 77.5% 72.6%
Pretax profit (RM m) 1,032.2 1,291.5 576.1 618.5 686.7
Net profit (RM m) 646.8 896.6 259.1 281.9 323.7
EPS (sen) 69.2 96.0 27.7 30.2 34.7
EPS growth (%) 16.2% 38.6% (71.1%) 8.8% 14.8%
P/E (x) 5.1 3.7 12.7 11.7 10.2
Core EPS (sen) 25.1 25.7 27.7 30.2 34.7
Core EPS growth (%) 6.7% 2.4% 7.8% 8.8% 14.8%
Stock Information
Core P/E (x) 14.1 13.7 12.7 11.7 10.2
Market cap: RM3,297m/US$1,051m FD core EPS (sen) 18.6 19.1 20.4 22.2 25.4
12-m price range: RM3.54 FD core P/E (x) 19.0 18.5 17.3 15.9 13.9
RM2.75 Gross DPS (sen) 14.0 14.7 15.0 15.0 15.0
3-m avg daily vol: 0.4m Dividend yield (%) 4.0% 4.2% 4.2% 4.2% 4.2%
No. of shrs (m): 934 P/BV (x) 0.7 0.6 0.6 0.6 0.6
Est. free float (%): 47.4 ROE (%) 14.2% 17.8% 4.8% 5.1% 5.6%
Conv. secs (m): 358 Net gearing (%) 19.8% 16.2% 16.1% 15.9% 15.7%
Major shareholders (%): P/FCFE (x) (24.4) (13.1) 42.1 11.7 10.4
- Petroliam Nasional Berhad 52.6 EV/EBITDA (x) 11.1 11.1 10.5 10.2 9.7
- Employees Provident Fund 12.3 % change in EPS estimates N/A N/A N/A
- Valuecap Sdn Bhd 3.7 CIMB/Consensus (x) 0.82 1.08 1.04
Source: Company, CIMB Research, Bloomberg
3.2
15.00
Development. It owns only selected properties within KLCC Development and not the
3.0
10.00
entire project, which includes other development activities. The only building owned
2.8
5.00
by KLCC Prop that is not part of KLCC Development is Kompleks Dayabumi. KLCC
2.6
De c-09 Ma y-10 Oct-10
0.00
Prop’s assets include 50.5% of Petronas Twin Towers, 60% of Suria KLCC, 33% of
Volume 1m (R.H.S c a le ) KLCC P rope rty Holding s Bhd Menara Maxis, 100% of Menara ExxonMobil, 75% of Mandarin Oriental Hotel and
Source: Bloomberg 100% of Lot C and Lot D1 development land.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Kossan Rubber Industries Bhd RM3.34 @07/12/10
Handled with care Target: RM5.41
Rubber Gloves
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 897.2 842.1 1,209.5 1,343.9 1,489.9
EBITDA (RM m) 107.9 128.5 198.7 242.8 287.8
EBITDA margins (%) 12.0% 15.3% 16.4% 18.1% 19.3%
Pretax profit (RM m) 72.9 85.8 153.0 189.2 225.7
Net profit (RM m) 58.6 66.7 118.5 144.7 170.4
EPS (sen) 18.3 20.9 37.1 45.3 53.3
EPS growth (%) 6.5% 13.7% 77.8% 22.1% 17.7%
P/E (x) 18.2 16.0 9.0 7.4 6.3
Stock Information Core EPS (sen) 18.3 37.4 37.1 45.3 53.3
Core EPS growth (%) 8.8% 104.1% (0.9%) 22.1% 17.7%
Market cap: RM1,068m/US$340m Core P/E (x) 18.2 8.9 9.0 7.4 6.3
12-m price range: RM4.25 Gross DPS (sen) 3.0 4.5 8.0 10.0 12.0
RM2.46 Dividend yield (%) 0.9% 1.3% 2.4% 3.0% 3.6%
3-m avg daily vol: 0.8m P/BV (x) 3.6 3.0 2.3 1.8 1.4
No. of shrs (m): 320 ROE (%) 21.3% 20.3% 29.0% 27.6% 25.7%
Est. free float (%): 36.3 Net gearing (%) 70.1% 50.8% 26.8% 5.4% N/A
Conv. secs (m): None Net cash per share (RM) N/A N/A N/A N/A 0.26
Major shareholders (%): P/FCFE (x) (22.0) (252.1) 16.6 9.9 7.9
- Kossan Holdings Sdn Bhd 51.8 EV/EBITDA (x) 11.9 9.7 6.0 4.5 3.4
- Kumpulan Wang Persaraan 7.0 % change in EPS estimates (3.6%) (5.9%) (5.4%)
- Asian Small Companies 4.9 CIMB/Consensus (x) 1.01 1.13 1.21
Source: Company, CIMB Research, Bloomberg
1.50
diversified into rubber glove manufacturing in 1988. It listed on the Main Board of
3.3
1.00
Bursa Malaysia in 1996 and today has 124 glove production lines producing 12.5bn
2.8
0.50 pieces per annum. The company has a diversified mix of natural rubber and nitrile
2.3
Dec-09 May-10 Oct-10
0.00
glove products, representing 40% and 60% of capacity, respectively. Kossan also
Volume 1m (R.H.Scale) Kossan Rubber Industries Bhd manufactures high technical input rubber products for a wide range of applications
Source: Bloomberg including the automotive and marine sectors.
Others 0 4 0 0 0
5.0
Cash flow from investing (66) (36) (60) (60) (60)
Debt raised/(repaid) 2 (32) 6 6 7 4.0
Equity raised/(repaid) 0 0 0 0 0
3.0
Dividends paid (11) (8) (11) (19) (24) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 0 0 0 0 0
Cash flow from financing (10) (40) (5) (13) (17)
Change in cash (51) (4) 64 99 121
Change in net cash/(debt) (52) 28 58 93 115
Ending net cash/(debt) (210) (182) (124) (32) 83
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Kuala Lumpur Kepong Bhd RM21.58 @07/12/10
Tapping into higher rubber and CPO prices Target: RM25.00
Palm Oil & Rubber
KLK MK / KLKK.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Sep 2009 2010 2011F 2012F 2013F
Revenue (RM m) 6,658.3 7,490.6 8,972.6 9,565.0 10,158.0
EBITDA (RM m) 1,102.7 1,637.9 1,861.0 2,042.0 2,094.4
EBITDA margins (%) 16.6% 21.9% 20.7% 21.3% 20.6%
Pretax profit (RM m) 887.4 1,382.8 1,585.5 1,755.1 1,798.0
Net profit (RM m) 612.5 1,012.3 1,143.0 1,265.2 1,296.1
EPS (sen) 57.4 94.8 107.1 118.5 121.4
Stock Information EPS growth (%) (41.1%) 65.3% 12.9% 10.7% 2.4%
Market cap: RM23,037m/US$7,344m P/E (x) 37.6 22.8 20.2 18.2 17.8
12-m price range: RM21.58 Gross DPS (sen) 53.2 79.8 86.5 93.1 97.1
RM15.56 Dividend yield (%) 2.5% 3.7% 4.0% 4.3% 4.5%
3-m avg daily vol: 1.1m P/BV (x) 4.1 3.8 3.5 3.2 3.0
No. of shrs (m): 1,068 ROE (%) 11.0% 17.4% 18.0% 18.2% 17.2%
Est. free float (%): 42.3 Net gearing (%) 7.7% 6.8% 9.1% 5.4% 2.4%
Conv. secs (m): None P/FCFE (x) 39.4 54.5 125.1 22.9 22.4
Major shareholders (%): EV/EBITDA (x) 21.4 14.4 12.8 11.6 11.2
- Batu Kawan 45.7 % change in EPS estimates - - -
- Employees Provident Fund 16.1 CIMB/Consensus (x) 0.94 0.95 0.92
Source: Company, CIMB Research, Bloomberg
18.7
0.40 has expanded downstream into resource-based manufacturing, in particular,
17.7
0.30
0.20
oleochemicals, cocoa processing and rubber processing. It is also involved in property
16.7
15.7 0.10 development as well as retailing (100%-owned Crabtree & Evelyn). The group has an
14.7
De c-09 Ma y-10 Oct-10
0.00
18% stake in Yule Catto, which is listed on the London Stock Exchange. KLK owns
Volume 10m (R.H.S ca le ) Kua la Lumpur Ke pong Bhd 170,071ha of planted oil palm and rubber estates, which are located in Peninsular
Source: Bloomberg Malaysia (41%), East Malaysia (26%) and Indonesia (33%).
Equity raised/(repaid) 0 0 0 0 0
12.0
Dividends paid (572) (479) (692) (745) (777) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 79 (15) (54) (92) (79)
Cash flow from financing (532) (533) (1,033) (837) (856)
Change in cash 124 (13) (502) 226 222
Change in net cash/(debt) 162 26 (215) 226 222
Ending net cash/(debt) (458) (432) (647) (421) (199)
Source: Company, CIMB Research, Bloomberg
MALAYSIA
UNDERPERFORM Maintained
Kurnia Asia Bhd RM0.35 @07/12/10
Murky earnings outlook Target: RM0.20
Insurance - General
KUAB MK / KURN.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Gross premium (RM m) 1,121.8 977.7 1,023.8 1,095.5 1,161.2
Investment & other income (RM m) 81.3 85.2 90.0 91.8 93.6
Revenue (RM m) 1,011.2 854.3 901.0 964.1 1,021.9
Stock Information Operating profit (RM m) (314.4) 102.4 47.6 47.8 49.8
Pretax profit (RM m) (314.4) 102.4 47.6 47.8 49.8
Market cap: RM525m/US$167m (301.8) 112.2 32.4 35.8 37.3
Net profit (RM m)
12-m price range: RM0.76 (20.1) 7.5 2.2 2.4 2.5
EPS (sen)
RM0.35 (12,174% 137% (71%) 11% 4%
EPS growth (%)
3-m avg daily vol: 0.6m nm 4.7 16.2 14.7 14.1
P/E (x)
No. of shrs (m): 1,500 0.0 0.0 0.0 0.0 0.4
Gross DPS (sen)
Est. free float (%): 37.6 0.0% 0.0% 0.0% 0.0% 1.1%
Dividend yield (%)
Conv. secs (m): None 3.5 1.7 1.6 1.4 1.3
P/BV (x)
Major shareholders (%): (97.8%) 49.6% 10.2% 10.2% 9.7%
ROE (%)
- Tan Sri Kua Sian Kooi 51.7
% change in EPS estimates - - -
- Datuk Kua Chung Sen 4.9
CIMB/Consensus (x) 0.90 0.61 0.58
Source: Company, CIMB Research, Bloomberg
0.40
gross premium of more than RM1bn, of which about 80%+ is generated from the auto
0.4
0.4
0.20 insurance segment. Kurnia has been pushing for regional expansion with the following
0.3
Dec-09 May-10 Oct-10
0.00
moves (1) acquisition of 80% of Kurnia Insurans Indonesia in 2007, and (2) acquisition
Volume 10m (R.H.Scale) Kurnia Asia Bhd of a 26.3% stake in Kurnia Insurance (Thailand). In Jul 07, the group embarked on a
Source: Bloomberg transformation programme to revamp its underwriting portfolio and achieve greater
operating efficiency.
6.40 38.0
28.0
5.40
18.0
4.40 8.0
-2.0
3.40
-12.0
-22.0
2.40
-32.0
1.40 -42.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
Lafarge Malayan Cement Bhd RM7.42 @04/12/10
The cement giant Target: RM6.37
Cement
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 2,530.8 2,483.1 2,470.7 2,624.5 2,680.5
EBITDA (RM m) 544.6 602.6 510.1 666.9 691.2
EBITDA margins (%) 21.5% 24.3% 20.6% 25.4% 25.8%
Pretax profit (RM m) 397.8 441.9 360.6 526.2 552.9
Net profit (RM m) 367.7 412.2 297.8 435.3 457.4
EPS (sen) 43.3 48.5 35.0 51.2 53.8
EPS growth (%) 31.1% 12.1% (27.8%) 46.2% 5.1%
P/E (x) 17.1 15.3 21.2 14.5 13.8
Stock Information Core EPS (sen) 40.0 48.5 35.0 51.2 53.8
Core EPS growth (%) 21.3% 21.1% (27.8%) 46.2% 5.1%
Market cap: RM6,305m/US$2,002m Core P/E (x) 18.5 15.3 21.2 14.5 13.8
12-m price range: RM8.10 Gross DPS (sen) 30.0 38.0 34.0 42.0 45.0
RM6.06 Dividend yield (%) 4.0% 5.1% 4.6% 5.7% 6.1%
3-m avg daily vol: 0.9m P/BV (x) 2.1 2.0 2.0 1.9 1.8
No. of shrs (m): 850 ROE (%) 12.4% 13.2% 9.3% 13.3% 13.4%
Est. free float (%): 30.5 Net gearing (%) 10.8% N/A N/A N/A N/A
Conv. secs (m): None Net cash per share (RM) N/A 0.06 0.16 0.40 0.68
Major shareholders (%): P/FCFE (x) 30.1 12.1 25.9 12.7 11.8
- Lafarge Cement UK Plc 53.8 EV/EBITDA (x) 12.2 10.4 12.1 9.0 8.3
- Associated International 8.4 % change in EPS estimates N/A N/A N/A
- Employees Provident Fund 7.3 CIMB/Consensus (x) 0.88 1.00 0.98
Source: Company, CIMB Research, Bloomberg
7.7
7.00
6.00
leader in building material solutions with operations in 78 countries. The group’s
7.2
5.00 earnings are mainly from the manufacturing and distribution of cement, ready mixed
4.00
6.7 3.00 concrete, and other related building materials. LMC was the first cement company in
6.2
2.00
1.00
Malaysia, building its first cement plant in Rawang in 1953. Today, LMC employs
5.7
Dec-09 May-10 Oct-10
0.00
some 1,200 people and is Malaysia’s largest cement player with a market share of
Volume 1m (R.H.Scale) Lafarge Malayan Cement Bhd about 43%. While the bulk of LMC’s cement is sold locally in Malaysia, the company
Source: Bloomberg has a presence in Singapore where it imports, sells, and trades building materials.
Equity raised/(repaid) 0 0 0 0 0
5.0
Dividends paid (253) (255) (289) (302) (302) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 13 12 0 0 (1)
Cash flow from financing (415) (343) (423) (305) (305)
Change in cash (31) 278 (46) 196 234
Change in net cash/(debt) 144 378 87 199 236
Ending net cash/(debt) (332) 51 139 337 575
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Latexx Partners RM2.67 @07/12/10
Good things come in small packages Target: RM3.85
Rubber Gloves
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 223.3 328.5 437.4 531.8 537.6
EBITDA (RM m) 24.1 66.7 118.8 140.2 154.4
EBITDA margins (%) 10.8% 20.3% 27.2% 26.4% 28.7%
Pretax profit (RM m) 15.2 51.8 101.6 119.6 130.3
Net profit (RM m) 15.2 51.3 81.3 95.7 104.2
EPS (sen) 6.9 23.5 37.1 43.7 47.6
EPS growth (%) 212.6% 237.8% 58.4% 17.8% 8.9%
P/E (x) 38.5 11.4 7.2 6.1 5.6
Stock Information
FD core EPS (sen) 5.5 18.7 29.6 34.8 37.9
Market cap: RM584m/US$186m FD core P/E (x) 48.3 14.3 9.0 7.7 7.0
12-m price range: RM4.83 Gross DPS (sen) 0.0 2.0 7.5 11.0 14.0
RM2.40 Dividend yield (%) 0.0% 0.7% 2.8% 4.1% 5.2%
3-m avg daily vol: 1.4m P/BV (x) 4.8 3.4 2.4 1.8 1.4
No. of shrs (m): 219 ROE (%) 13.4% 35.3% 38.9% 33.0% 27.8%
Est. free float (%): 64.5 Net gearing (%) 47.0% 43.0% 12.5% N/A N/A
Conv. secs (m): 56.0 Net cash per share (RM) N/A N/A N/A 0.02 0.25
Major shareholders (%): P/FCFE (x) 115.5 42.5 10.9 9.6 6.7
- BT Capital Sdn Bhd 23.6 EV/EBITDA (x) 26.6 9.9 5.2 4.1 3.4
- Lembaga Tabung Haji 6.1 % change in EPS estimates N/A N/A N/A
- Best Time Ventures 5.9 CIMB/Consensus (x) 1.00 1.02 0.89
Source: Company, CIMB Research, Bloomberg
4.2
1.20 Its office and manufacturing facilities are located in Kamunting Industrial Estate in
3.7
1.00
0.80
Kamunting, Perak. The company currently owns six manufacturing plants located on a
3.2
0.60 40-acre plot that has space for expansion. With its current annual production capacity
0.40
2.7
0.20
of 8.0bn pieces of gloves, Latexx ranks as the fifth largest glove manufacturer in
2.2
Dec-09 May-10 Oct-10
0.00
Malaysia with 4% global market share. The company focuses on higher-quality
Volume 10m (R.H.Scale) Latexx Partners powder-free natural rubber (NR) gloves and nitrile gloves. It is planning a staggered
Source: Bloomberg capacity expansion to keep pace with growing market demand.
MALAYSIA
OUTPERFORM Maintained
Malayan Banking Bhd RM8.41 @07/12/10
Recharging BII Target: RM10.50
Banks
MAY MK / MBBM.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Net interest income (RM m) 5,919.5 6,770.9 7,670.2 8,401.6 9,211.7
Non-interest income (RM m) 4,599.5 6,100.8 4,710.2 4,847.0 5,288.3
Total income (RM m) 10,519.0 12,871.7 14,117.6 15,132.5 16,541.3
Loan loss provisions (RM m) (1,698.8) (1,188.0) (1,393.5) (1,136.9) (1,100.1)
Pretax profit (RM m) 1,674.3 5,370.4 6,166.7 6,917.4 7,795.1
Net profit (RM m) 691.9 3,818.2 4,532.5 5,084.3 5,729.4
Stock Information EPS (sen) 11.1 53.8 63.9 71.7 80.8
Market cap: RM59,526m/US$18,975m EPS growth (%) (80%) 387% 19% 12% 13%
12-m price range: RM9.29 P/E (x) 76.0 15.6 13.2 11.7 10.4
RM6.71 Core EPS (sen) 34.9 53.8 63.9 71.7 80.8
3-m avg daily vol: 9.2m Core EPS growth (%) (42%) 54% 19% 12% 13%
No. of shrs (m): 7,078 Core P/E (x) 24.1 15.6 13.2 11.7 10.4
Est. free float (%): 51.0 Gross DPS (sen) 8.0 55.0 59.6 66.9 75.4
Conv. secs (m): None Dividend yield (%) 1.0% 6.5% 7.1% 8.0% 9.0%
Major shareholders (%): P/BV (x) 2.4 2.1 2.1 1.9 1.8
- Skim Amanah Saham 44.7 ROE (%) 3.1% 14.5% 15.9% 16.8% 17.6%
- Employees Provident Fund 10.9 % change in EPS estimates - - -
- Permodalan Nasional 5.9
Berhad CIMB/Consensus (x) 1.05 1.05 1.08
Source: Company, CIMB Research, Bloomberg
8.8
2.50 2000, it acquired Pacific Bank and Phileo Allied Bank. The group’s lending is mostly
8.3
2.00
channelled to the consumer segment, which accounts for almost half of its local loan
1.50
7.8
7.3 1.00
portfolio. Maybank also has sizeable exposure to foreign markets, with foreign loans,
6.8 0.50 mainly in Singapore and Indonesia, making up 33% of its total loan base. In early
6.3
De c-09 Ma y-10 Oct-10
0.00
2008, it embarked on an aggressive overseas expansion programme. It acquired 20%
Volume 10m (R.H.S ca le ) Ma la ya n Ba nking Bhd of Pakistan’s MCB Bank, 15% of Vietnam’s An Binh Bank and 97.5% of Bank
Source: Bloomberg Internasional Indonesia (BII) in 2008.
2.60
19.0
2.40
17.0
2.20
2.00 15.0
1.80
13.0
1.60
11.0
1.40
1.20 9.0
1.00
7.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
MALAYSIA
OUTPERFORM Maintained
Malaysia Airports Holdings Bhd RM6.27 @07/12/10
Still on a high plane Target: RM7.50
Airports
MAHB MK / MAHB.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 1,435.0 1,637.1 1,824.2 1,917.0 2,187.8
EBITDA (RM m) 534.6 603.2 711.3 761.4 857.2
EBITDA margins (%) 37.3% 36.8% 39.0% 39.7% 39.2%
Pretax profit (RM m) 422.2 480.1 507.9 553.3 520.3
Net profit (RM m) 298.3 379.3 375.2 414.3 389.6
EPS (sen) 27.1 34.5 34.1 37.7 35.4
EPS growth (%) 2.8% 27.1% (1.1%) 10.4% (6.0%)
P/E (x) 23.1 18.2 18.4 16.6 17.7
Stock Information
Core EPS (sen) 24.5 31.7 34.1 37.7 35.4
Market cap: RM6,897m/US$2,192m Core EPS growth (%) (7.0%) 29.2% 7.7% 10.4% (6.0%)
12-m price range: RM6.27 Gross DPS (sen) 18.6 22.9 22.9 25.1 25.1
RM3.75 Dividend yield (%) 3.0% 3.7% 3.7% 4.0% 4.0%
3-m avg daily vol: 0.6m P/BV (x) 2.2 2.0 2.0 1.9 1.8
No. of shrs (m): 1,100 ROE (%) 9.7% 11.6% 11.0% 11.6% 10.3%
Est. free float (%): 30.0 Net gearing (%) N/A 7.1% 35.6% 72.4% 72.4%
Conv. secs (m): None Net cash per share (RM) 0.61 N/A N/A N/A N/A
Major shareholders (%): P/FCFE (x) 50.4 (29.3) 24.0 4,333.9 22.9
- Khazanah Nasional 54.0 EV/EBITDA (x) 11.5 11.6 11.3 12.4 11.2
- Employees Provident Fund 11.9 % change in EPS estimates - - -
- T Rowe Price 1.7 CIMB/Consensus (x) 1.04 0.97 0.95
Source: Company, CIMB Research, Bloomberg
5.0
2.00
MAHB is 54% owned by Khazanah Nasional. It operates and manages 39 airports in
4.5
1.50 Malaysia comprising international, domestic and short take-off and landing ports.
1.00
4.0 0.50
Apart from its local operations, MAHB also has four international airports under its
3.5
De c-09 Ma y-10 Oct-10
0.00
portfolio, namely Delhi International Airport and Hyderabad International Airport in
Volume 1m (R.H.S ca le ) Ma la ys ia Airports Holdings Bhd India, Sabiha Gokcen International Airport in Turkey and the Maldives International
Source: Bloomberg Airport in Maldives.
MALAYSIA
OUTPERFORM Maintained
Malaysian Airline System Bhd RM2.07 @07/12/10
Radical transformation on the cards Target: RM3.00
Airlines
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 15,034.2 11,309.8 12,633.7 13,827.6 15,561.4
EBITDA (RM m) 344.0 (375.9) 242.0 1,386.1 2,526.9
EBITDA margins (%) 2.3% (3.3%) 1.9% 10.0% 16.2%
Pretax profit (RM m) 302.7 462.0 106.3 722.9 1,751.8
Net profit (RM m) 244.4 490.2 92.5 708.8 1,734.1
EPS (sen) 11.9 23.9 3.0 21.2 51.9
EPS growth (%) (74.9%) 100.6% (87.6%) 617.3% 144.7%
P/E (x) 17.4 8.7 70.0 9.8 4.0
Core EPS (sen) 6.8 (111.8) (29.0) 17.3 51.9
Core EPS growth (%) (86.0%) (1,739.1%) 74.1% 159.8% 199.2%
Core P/E (x) 30.4 nm nm 11.9 4.0
FD core EPS (sen) 7.0 (104.1) (27.3) 17.1 50.3
Stock Information
FD core P/E (x) 29.7 nm nm 12.1 4.1
Market cap: RM6,918m/US$2,205m Gross DPS (sen) 0.0 0.0 0.0 0.0 0.0
12-m price range: RM2.59 Dividend yield (%) 0.0% 0.0% 0.0% 0.0% 0.0%
RM1.80 P/BV (x) 1.0 5.8 2.0 1.6 1.2
3-m avg daily vol: 2.2m ROE (%) 6.0% 19.9% 4.4% 18.4% 34.2%
No. of shrs (m): 3,342 Net gearing (%) N/A N/A 27.4% 37.1% 14.0%
Est. free float (%): 15.0 Net cash per share (RM) 1.56 0.31 N/A N/A N/A
Conv. secs (m): 134.3 P/FCFE (x) (7.2) (2.6) (2.3) 22.1 4.4
Major shareholders (%): EV/EBITDA (x) 3.1 (9.7) 30.8 6.1 3.1
- Penerbangan Malaysia 70.0 % change in EPS estimates N/A N/A N/A
- EPF 10.0 CIMB/Consensus (x) (4.43) 1.53 2.26
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
Malaysian Bulk Carriers Bhd RM2.97 @07/12/10
Avoid the bulk and tanker space Target: RM2.80
Dry Bulk Shipping
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 721.1 303.7 427.3 436.2 604.5
EBITDA (RM m) 341.9 105.3 222.9 221.1 330.8
EBITDA margins (%) 47.4% 34.7% 52.2% 50.7% 54.7%
Pretax profit (RM m) 525.8 260.1 220.4 220.6 326.7
Net profit (RM m) 460.9 255.7 212.8 214.3 317.7
EPS (sen) 46.1 25.6 21.3 21.4 31.8
EPS growth (%) (15.4%) (44.5%) (16.8%) 0.7% 48.3%
P/E (x) 6.4 11.6 14.0 13.9 9.3
Stock Information Core EPS (sen) 27.9 18.5 21.3 21.4 31.8
Core EPS growth (%) (21.5%) (33.8%) 15.2% 0.7% 48.3%
Market cap: RM2,970m/US$947m Core P/E (x) 10.7 16.1 14.0 13.9 9.3
12-m price range: RM3.25 Gross DPS (sen) 51.4 20.3 13.5 16.2 27.0
RM2.81 Dividend yield (%) 17.3% 6.8% 4.6% 5.5% 9.1%
3-m avg daily vol: 0.3m P/BV (x) 1.6 1.7 1.6 1.5 1.4
No. of shrs (m): 1,000 ROE (%) 25.8% 13.9% 11.7% 11.2% 15.4%
Est. free float (%): 31.0 Net gearing (%) N/A N/A N/A 1.2% 1.8%
Conv. secs (m): None Net cash per share (RM) 0.44 0.11 0.08 N/A N/A
Major shareholders (%): P/FCFE (x) 18.0 166.9 16.4 (416.4) 28.6
- Pacific Carriers Ltd. 34.5 EV/EBITDA (x) 5.3 18.6 8.8 9.2 6.1
- Bank Pembangunan 18.4 % change in EPS estimates N/A N/A N/A
- PPB Group Bhd 14.0 CIMB/Consensus (x) 1.01 0.94 1.20
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Malaysian Pacific Industries Bhd RM5.45 @07/12/10
A more muted outlook Target: RM6.90
Semiconductor
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,150.6 1,386.2 1,441.7 1,614.6 1,776.1
EBITDA (RM m) 258.1 355.1 338.8 387.5 435.1
EBITDA margins (%) 22.4% 25.6% 23.5% 24.0% 24.5%
Pretax profit (RM m) (61.7) 85.0 123.1 165.3 220.7
Net profit (RM m) (39.9) 105.4 94.2 123.5 164.9
EPS (sen) (20.5) 54.1 48.3 63.3 84.6
EPS growth (%) (135.6%) 364.2% (10.7%) 31.1% 33.6%
P/E (x) nm 10.1 11.3 8.6 6.4
Stock Information Core EPS (sen) 16.0 54.0 48.3 63.3 84.6
Market cap: RM1,144m/US$365m Core EPS growth (%) (74.6%) 238.8% (10.6%) 31.1% 33.6%
12-m price range: RM7.50 Core P/E (x) 34.2 10.1 11.3 8.6 6.4
RM5.20 Gross DPS (sen) 26.7 33.3 33.3 40.0 50.0
3-m avg daily vol: 0.1m Dividend yield (%) 4.9% 6.1% 6.1% 7.3% 9.2%
No. of shrs (m): 210 P/BV (x) 1.5 1.4 1.4 1.3 1.2
Est. free float (%): 21.0 ROE (%) (5.4%) 14.7% 12.5% 15.6% 19.4%
Conv. secs (m): None Net gearing (%) 20.6% 9.1% 12.1% 7.9% 2.5%
Major shareholders (%): P/FCFE (x) 55.2 8.5 20.4 7.5 5.7
- Hong Leong Industries 67.1 EV/EBITDA (x) 5.7 3.9 4.2 3.6 3.2
- ASB 4.7 % change in EPS estimates N/A N/A N/A
- Great Eastern 2.2 CIMB/Consensus (x) 0.89 1.11 1.52
Source: Company, CIMB Research, Bloomberg
6.4 0.60
testing and sale of integrated circuits, semiconductor devices, electronic components
5.9 0.40
and leadframes to customers worldwide. It is also currently one of the top 10 global
5.4 0.20 players in the semiconductor test and assembly services (SATS) space. It is listed on
4.9
De c-09 Ma y-10 Oct-10
0.00
the Main Board of Bursa Malaysia. About 87% of its 3QCY10 revenue is from Carsem
Volume 1m (R.H.S ca le ) Ma la ys ia n P a cific Indus trie s Bhd while the balance is from Dynacraft. For 3QCY10, 46% of its revenue is from Asia,
Source: Bloomberg 25% from the US and 30% from Europe.
Others 16 0 40 41 42
28.0
Cash flow from operations 232 353 360 396 440
Capex (124) (189) (300) (250) (250) 23.0
Net investments & sale of FA 0 0 0 0 0
Others 0 0 0 0 0 18.0
Cash flow from investing (124) (189) (300) (250) (250)
Debt raised/(repaid) (82) (44) 0 0 0 13.0
Equity raised/(repaid) 0 0 0 0 0
8.0
Dividends paid (52) (67) (87) (104) (130) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (8) 6 (8) (6) (5)
Cash flow from financing (142) (105) (95) (110) (135)
Change in cash (33) 58 (35) 37 55
Change in net cash/(debt) 48 102 (35) 37 55
Ending net cash/(debt) (190) (87) (122) (85) (30)
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Malaysian Resources Corp Bhd RM2.01 @07/12/10
The urge to merge Target: RM2.53
Construction
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 788.6 921.6 1,065.6 1,182.2 1,313.0
EBITDA (RM m) 3.8 45.3 121.8 140.5 156.3
EBITDA margins (%) 0.5% 4.9% 11.4% 11.9% 11.9%
Pretax profit (RM m) (42.1) 46.5 68.4 88.4 107.0
Net profit (RM m) (56.6) 34.6 51.3 66.4 80.4
EPS (sen) (6.2) 3.8 3.8 4.9 5.9
EPS growth (%) (191.6%) 161.1% (1.3%) 29.4% 21.0%
P/E (x) nm 52.7 53.4 41.3 34.1
Core EPS (sen) (3.4) 3.8 3.8 4.9 5.9
Core EPS growth (%) (149.5%) 213.0% (1.3%) 29.4% 21.0%
Stock Information
Core P/E (x) nm 52.7 53.4 41.3 34.1
Market cap: RM2,776m/US$882m Gross DPS (sen) 0.0 1.0 1.0 1.0 1.0
12-m price range: RM2.25 Dividend yield (%) 0.0% 0.5% 0.5% 0.5% 0.5%
RM1.24 P/BV (x) 2.7 2.6 3.6 3.3 3.0
3-m avg daily vol: 6.0m ROE (%) (8.2%) 5.0% 6.9% 8.3% 9.2%
No. of shrs (m): 1,381 Net gearing (%) 39.3% 37.0% 26.6% 14.8% 2.3%
Est. free float (%): 58.1 P/FCFE (x) 14.9 199.5 19.4 16.2 14.1
Conv. secs (m): None EV/EBITDA (x) 504.9 42.3 22.7 19.0 16.4
Major shareholders (%): % change in EPS estimates - - -
- EPF 41.9 CIMB/Consensus (x) 0.96 0.89 0.98
Source: Company, CIMB Research, Bloomberg
1.5
2.00 specialises in civil and energy infrastructure development and has built transmission
1.3
1.00 networks, colleges, transportation facilities, hospitals and roads all over the country.
1.1
De c-09 Ma y-10 Oct-10
0.00
The group is the nation’s biggest developer of high-voltage transmission networks. On
Volume 10m (R.H.S ca le ) Ma la ys ia n Re s ource s Corp Bhd the property front, its flagship development is the 72-acre KL Sentral which remains
Source: Bloomberg the group’s crown jewel.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Masterskill Education Group RM2.14 @06/12/10
Making the grade for long-term investment Target: RM4.48
Education
• Maintain OUTPERFORM. Although uncertainty over the status of the PTPTN loan
scheme may overhang Masterskill’s share price in the near term, we maintain our
OUTPERFORM stance as the stock scores on long-term fundamentals and
defensiveness. Applying a 10% discount to our revised target market P/E of 14.5x
(previously on par with 13.8x) to reflect risks relating to the PTPTN loan scheme,
our target price goes down from RM4.73 to RM4.48. The stock could be catalysed
by (ii) a favourable decision on the PTPTN appeal, (ii) better-than-expected student
growth, and (iii) recovery in investor sentiment. Valuations are attractive at 6-7x
CY11-12 P/E.
• Fundamentally still attractive. We still regard Masterskill’s (i) leading position in
the industry with the highest market share in its segment, (ii) EBITDA margin of
over 40% which is higher than local education companies’ 15-20%, and (iii)
exposure to the growth prospects of both the healthcare and education sectors as
key factors that will ensure strong fundamentals over the long term.
• More of a margin impact from new PTPTN scheme. The potential new loan
scheme will affect Masterskill’s margins more than its student population or
enrolment. Also, it will hit only the Kuching campus as (i) this campus is new, and
(ii) it offers two new diploma courses. We estimate only a 1-2% dent on group
earnings. Management stressed that it will not affect the bottomline immediately as
diploma programmes span three years. Though the timing of a decision on the
appeal is unclear, we continue to believe that it will be in the group’s favour.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 202.9 273.4 326.4 363.0 410.0
EBITDA (RM m) 90.1 123.5 139.5 159.0 182.4
EBITDA margins (%) 44.4% 45.2% 42.7% 43.8% 44.5%
Pretax profit (RM m) 80.1 112.3 127.1 149.2 176.8
Stock Information Net profit (RM m) 72.1 97.4 103.7 118.9 140.5
EPS (sen) 17.6 23.8 25.3 29.0 34.3
Market cap: RM877m/US$279m EPS growth (%) 40.2% 35.1% 6.5% 14.7% 18.2%
12-m price range: RM4.25 P/E (x) 12.2 9.0 8.5 7.4 6.2
RM2.06 Gross DPS (sen) 0.0 0.0 12.6 14.5 17.1
3-m avg daily vol: 1.8m Dividend yield (%) 0.0% 0.0% 5.9% 6.8% 8.0%
No. of shrs (m): 410 P/BV (x) 5.5 3.1 2.2 1.7 1.3
Est. free float (%): 40.9 ROE (%) 60.7% 43.8% 30.6% 26.4% 24.2%
Conv. secs (m): None Net cash per share (RM) 0.02 0.17 0.49 0.75 1.07
Major shareholders (%): P/FCFE (x) 227.3 20.0 6.9 6.2 6.9
- Dato' Seri Edmund Santhara 22.1 EV/EBITDA (x) 9.6 6.5 4.8 3.6 2.4
- Masterskill Holding Ltd 21.5 % change in EPS estimates - - -
- Fidelity 9.6 CIMB/Consensus (x) 0.98 0.95 0.94
Source: Company, CIMB Research, Bloomberg
4.00
provider in Malaysia. Masterskill is the leading brand in healthcare education and has
2.9 3.00 significant scale compared to its competitors. Based on student enrolment, the group
2.4
2.00
1.00
had 22% market share of nursing education among private higher education
1.9
Ma y-10 Aug -10 Nov-10
0.00
institutions in 2010. Masterskill offers diploma and degree programmes targeted
Volume 10m (R.H.S ca le ) Ma s te rs kill Educa tion Group primarily at Malaysian secondary school leavers and will soon venture into medical
Source: Bloomberg and masters degree programmes as it moves up the value chain.
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Maxis Berhad RM5.36 @07/12/10
Not maxed out Target: RM5.60
Telecommunications - Mobile
• Maxis is a NEUTRAL as its fairly attractive dividends make up for the lack of price
catalysts and low earnings growth. Voice revenue is coming under pressure due to
falling tariffs and dwindling price elasticity but is compensated by rising data
revenue. Our DCF-based target price remains intact at RM5.60 (WACC 10.8%).
• Data-driven revenue. Maxis expects its FY11 revenue growth to accelerate to mid-
single digit from an expected 3% in FY10 and also a slight rise in EBITDA margin,
which is consistent with our view. This is lower than Celcom’s and DiGi’s
expectation of high-single digit growth given its larger base. Maxis believes that
data revenue will continue compensating for the decline in voice, where price
elasticity has been maximised. FY11 capex should remain at the FY10 level of
RM1.4bn though this figure is likely to fall if it inks an agreement to use Telekom
Malaysia’s HSBB network. The telco indicated that it is close to signing an
agreement, after being delayed for a few months.
• Quad play ambitions. Maxis is investing RM200m in fibre to the home. It is
engaging TM on a pricing and service level agreement to access TM’s highspeed
broadband network.
• Will Maxis deliver 40-50 sen net DPS? Maxis is vague over whether it will deliver
the 40-50 sen net DPS that its major shareholder indicated during its IPO. We
assume that it will declare a net DPS of 38 sen, implying a final special dividend of
6 sen on top of a quarterly DPS of 8 sen.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 8,449.8 8,611.0 8,899.8 9,405.0 9,980.0
EBITDA (RM m) 4,402.0 4,318.0 4,426.1 4,790.2 5,093.1
EBITDA margins (%) 52.1% 50.1% 49.7% 50.9% 51.0%
Pretax profit (RM m) 3,227.7 3,007.0 3,165.6 3,472.4 3,790.8
Net profit (RM m) 2,394.7 2,232.0 2,320.4 2,545.3 2,778.7
EPS (sen) 31.9 29.8 30.9 33.9 37.0
EPS growth (%) 20.9% (6.8%) 4.0% 9.7% 9.2%
P/E (x) 16.8 18.0 17.3 15.8 14.5
Core EPS (sen) 31.9 30.8 30.9 33.9 37.0
Core EPS growth (%) 1.7% (3.6%) 0.5% 9.7% 9.2%
Stock Information
Core P/E (x) 16.8 17.4 17.3 15.8 14.5
Market cap: RM40,200m/US$12,815m Gross DPS (sen) 0.0 73.0 50.7 53.3 57.3
12-m price range: RM5.52 Dividend yield (%) 0.0% 13.6% 9.5% 10.0% 10.7%
RM5.12 P/BV (x) 9.4 4.5 4.7 5.0 5.2
3-m avg daily vol: 5.2m ROE (%) 69.5% 33.7% 26.6% 30.7% 35.2%
No. of shrs (m): 7,500 Net gearing (%) N/A 42.8% 57.0% 64.1% 71.3%
Est. free float (%): 30.0 P/FCFE (x) 17.7 5.8 10.7 15.6 13.8
Conv. secs (m): None EV/EBITDA (x) 9.0 10.2 10.2 9.5 9.0
Major shareholders (%): % change in EPS estimates - - -
- Maxis Communications 70.0 CIMB/Consensus (x) 1.00 1.03 1.07
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Media Chinese International Ltd RM0.88 @06/12/10
A clearer print Target: RM1.52
Media - Integrated
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,437.8 1,226.7 1,636.5 1,698.5 1,822.4
EBITDA (RM m) 119.7 176.4 206.8 227.6 245.3
EBITDA margins (%) 8.3% 14.4% 12.6% 13.4% 13.5%
Pretax profit (RM m) 113.2 179.8 196.6 216.4 232.5
Net profit (RM m) 61.2 134.2 151.4 166.6 178.8
EPS (sen) 3.6 8.0 9.0 9.9 10.6
EPS growth (%) (40.6%) 119.2% 12.8% 10.0% 7.3%
P/E (x) 24.2 11.1 9.8 8.9 8.3
Core EPS (sen) 4.1 7.8 9.0 9.9 10.6
Stock Information Core EPS growth (%) (32.8%) 90.5% 14.9% 10.0% 7.3%
Core P/E (x) 21.5 11.3 9.8 8.9 8.3
Market cap: RM1,482m/US$471m
Gross DPS (sen) 2.9 4.2 5.0 5.0 5.0
12-m price range: RM0.92
Dividend yield (%) 3.2% 4.8% 5.7% 5.7% 5.6%
RM0.53
P/BV (x) 1.3 1.2 1.1 1.0 1.0
3-m avg daily vol: 0.9m
ROE (%) 5.6% 11.5% 12.1% 12.2% 12.1%
No. of shrs (m): 1,684
Net cash per share (RM) 0.18 0.22 0.26 0.32 0.36
Est. free float (%): 50.0
P/FCFE (x) 38.2 11.7 12.0 10.2 11.3
Conv. secs (m): None
EV/EBITDA (x) 9.8 6.3 5.0 4.2 3.5
Major shareholders (%):
% change in EPS estimates N/A N/A N/A
- Tan Sri Datuk Tiong Hiew 50.0
King CIMB/Consensus (x) 2.99 3.09 3.21
Source: Company, CIMB Research, Bloomberg
Equity raised/(repaid) 0 0 0 0 0
6.0
Dividends paid (35) (36) (45) (50) (54) May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11
Cash interest & others 35 (35) 3 3 2
Cash flow from financing 1 (71) (43) (47) (52)
Change in cash 37 54 79 96 79
Change in net cash/(debt) 37 54 79 96 79
Ending net cash/(debt) 311 364 442 536 614
Source: Company, CIMB Research, Bloomberg
MALAYSIA
NEUTRAL Maintained
Media Prima Bhd RM2.34 @06/12/10
Fruits of consolidation Target: RM2.78
Media - Integrated
• Staying NEUTRAL. Despite the sustained ad volume momentum for the FTA TV
segment, we remain NEUTRAL on Media Prima as we believe its share price
already reflects the positives from the consolidation of NSTP. However, we raise
our FY10-12 EPS forecasts by 2-8% for stronger ad volume assumptions, partly
because of an expected pre-election adex boost, especially for NSTP. This, coupled
with an increase in our CY12 target market P/E from 13.8x to 14.5x, raises our
target price from RM2.46 to RM2.78. For exposure to the media sector, we prefer
Star Publications and Media Chinese International given their higher upside and
dividend yields.
• Still driven by TV. Due to the inclusion of NSTP, Media Prima’s revenue from TV
notched up 22% yoy growth in 9M10, which was also in line with the ad volume
momentum in the TV segment. A lower effective rate discount of 67% compared to
68% in 2009 signals a sustained recovery of TV ad volume. But viewership has
come off from 50% in 2009 to 46%, which is a slight concern.
• Cushioned by NSTP. Media Prima currently controls 98% of NSTP. NSTP, which
contributes 44% of group revenue, is benefiting from lower newsprint cost and
growth of Malay newspaper ad volume. This should offset potential downside to
Media Prima’s earnings.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 781.3 744.1 1,418.9 1,500.3 1,593.5
EBITDA (RM m) 190.1 146.7 309.7 340.2 375.3
EBITDA margins (%) 24.3% 19.7% 21.8% 22.7% 23.6%
Pretax profit (RM m) 159.3 275.8 199.5 225.4 255.8
Net profit (RM m) 117.7 251.8 158.2 181.7 207.4
EPS (sen) 12.0 25.8 16.2 18.6 21.2
EPS growth (%) 0.2% 114.0% (37.2%) 14.9% 14.2%
P/E (x) 19.4 9.1 14.5 12.6 11.0
Core EPS (sen) 12.3 27.4 16.2 18.6 21.2
Core EPS growth (%) 4.1% 123.1% (40.8%) 14.9% 14.2%
Core P/E (x) 19.1 8.6 14.5 12.6 11.0
Stock Information FD core EPS (sen) 10.9 24.3 14.7 16.9 19.2
Market cap: RM2,345m/US$745m FD core P/E (x) 21.5 9.6 15.9 13.9 12.2
12-m price range: RM2.40 Gross DPS (sen) 5.8 12.0 8.1 9.3 10.8
RM1.60 Dividend yield (%) 2.5% 5.1% 3.5% 4.0% 4.6%
3-m avg daily vol: 0.9m P/BV (x) 9.5 8.0 6.0 4.6 3.7
No. of shrs (m): 1,002 ROE (%) 58.0% 96.0% 47.6% 41.7% 37.1%
Est. free float (%): 41.6 Net gearing (%) 93.1% 44.4% 15.9% 0.0% N/A
Conv. secs (m): 150 Net cash per share (RM) N/A N/A N/A N/A 0.08
Major shareholders (%): P/FCFE (x) 16.0 7.8 18.1 17.6 14.6
- EPF 25.3 EV/EBITDA (x) 13.2 16.5 7.6 6.8 5.9
- Gabungan Kesturi 14.4 % change in EPS estimates 1.5% 3.0% 8.2%
- KWAP 4.9 CIMB/Consensus (x) 0.95 1.07 1.08
Source: Company, CIMB Research, Bloomberg
2.3 0.60 Corporation (MRCB) which resulted in it owning TV3 and print media company NSTP.
2.1
0.50
0.40
Today, Media Prima is the dominant free-to-air (FTA) TV company in Malaysia. With
1.9 0.30 control of all private TV stations, the group also generates revenue streams from the
0.20
1.7
0.10
print, radio and outdoor platforms. This diversification allows the group to capture a
1.5
De c-09 Ma y-10 Oct-10
0.00
substantial portion of the advertising spending in Malaysia. The well-defined target
Volume 10m (R.H.S c a le ) Me dia P rima Bhd audience of its four key TV channels exposes the company to minimal competitive
Source: Bloomberg risks. The successful privatisation of NSTP will be long-term positive for the group.
Cash flow from operations 160 415 281 297 324 13.0
Capex (20) (19) (150) (150) (149)
11.0
Net investments & sale of FA (13) (103) 0 0 0
9.0
Others 0 0 0 0 0
Cash flow from investing (33) (122) (150) (150) (149) 7.0
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
MISC Bhd RM8.75 @07/12/10
Battling cyclical and structural negatives Target: RM7.00
Tanker Shipping
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 15,783.4 13,775.0 14,056.7 14,350.7 15,319.7
EBITDA (RM m) 4,943.9 2,514.4 3,332.8 3,643.5 3,805.8
EBITDA margins (%) 31.3% 18.3% 23.7% 25.4% 24.8%
Pretax profit (RM m) 3,271.4 911.8 1,624.3 2,013.9 2,208.6
Net profit (RM m) 3,081.0 681.9 1,330.5 1,603.2 1,771.6
EPS (sen) 79.9 17.4 29.8 35.9 39.7
EPS growth (%) 26.8% (78.2%) 71.1% 20.5% 10.5%
P/E (x) 10.9 50.2 29.4 24.4 22.0
Stock Information Core EPS (sen) 79.9 23.3 29.8 35.9 39.7
Core EPS growth (%) 39.1% (70.8%) 27.8% 20.5% 10.5%
Market cap: RM39,058m/US$12,451m Core P/E (x) 10.9 37.5 29.4 24.4 22.0
12-m price range: RM9.00 Gross DPS (sen) 46.7 50.1 46.7 46.7 46.7
RM7.80 Dividend yield (%) 5.3% 5.7% 5.3% 5.3% 5.3%
3-m avg daily vol: 1.3m P/BV (x) 1.6 1.7 1.7 1.7 1.6
No. of shrs (m): 4,464 ROE (%) 15.6% 3.1% 5.6% 6.8% 7.5%
Est. free float (%): 17.0 Net gearing (%) 38.2% 20.5% 27.1% 25.4% 24.4%
Conv. secs (m): None P/FCFE (x) 10.8 104.5 (279.8) 21.0 23.1
Major shareholders (%): EV/EBITDA (x) 8.5 15.7 13.9 12.7 12.2
- Petronas 62.7 % change in EPS estimates N/A N/A N/A
- EPF 11.0 CIMB/Consensus (x) 0.74 0.75 0.76
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
MTD ACPI Engineering RM0.51 @07/12/10
Down and out for now Target: RM0.32
Construction
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 966.4 642.1 677.0 701.8 601.8
EBITDA (RM m) 28.0 5.0 4.4 35.5 34.0
EBITDA margins (%) 2.9% 0.8% 0.6% 5.1% 5.7%
Pretax profit (RM m) (4.0) (11.7) (14.0) 20.5 19.0
Net profit (RM m) (12.8) (18.5) (18.4) 11.3 10.0
EPS (sen) (5.8) (8.0) (7.9) 4.9 4.3
Stock Information EPS growth (%) (455.6%) (38.3%) 0.5% 161.2% (11.4%)
Market cap: RM118m/US$38m P/E (x) nm nm nm 10.5 11.9
12-m price range: RM0.69 Gross DPS (sen) 0.0 0.9 0.9 0.9 0.9
RM0.37 Dividend yield (%) 0.0% 1.8% 1.8% 1.8% 1.8%
3-m avg daily vol: 1.3m P/BV (x) 0.5 0.7 0.7 0.7 0.7
No. of shrs (m): 232 ROE (%) (5.3%) (9.5%) (10.9%) 6.9% 5.8%
Est. free float (%): 25.0 Net gearing (%) 3.9% 2.5% 2.8% N/A N/A
Conv. secs (m): None Net cash per share (RM) N/A N/A N/A 0.13 0.23
Major shareholders (%): P/FCFE (x) 4.0 24.7 107.6 3.3 5.0
- MTD Capital 38.1 EV/EBITDA (x) 4.7 26.4 30.6 2.9 2.5
- Metacorp 11.8 % change in EPS estimates - - -
- EPF 10.6 CIMB/Consensus (x) 1.00 0.99 1.00
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Muhibbah Engineering RM1.36 @06/12/10
Dig in Target: RM2.06
Construction
• Maintain TRADING BUY. We continue to like this midsized contractor for its
earnings and recovery story. Muhibbah’s share price is down more than 70% from
the historical high of RM4.24 reached in Jul 07. We reiterate our TRADING BUY
call with a higher RNAV-based target price of RM2.06 (RM2.00 previously) as we
apply our revised target market P/E of 14.5x (13.8x before) CY12 to our
construction and shipping net profit forecast. We continue to value the stock at a
20% discount to its RNAV. Factors that could catalyse the stock include (i) a
resolution to the APH project, (ii) contract wins, and (iii) a recovery of investor
sentiment on the stock.
• Diversified earnings. Though infrastructure construction remains the major
contributor at 65% of revenue, Muhibbah has a fairly diversified business model that
provides exposure to oil & gas and airport/road maintenance concessions. The
group’s outstanding order book of RM3bn is good for another three years and has
more room for upside as it is actively bidding for jobs, both locally and overseas.
• APH resolution is a major catalyst. We continue to believe that there is a strong
chance of a resolution to the APH project. We do not discount the possibility of a
shareholding restructuring that could bring in additional funds to revive the project.
This should be positive for the recovery in investor sentiment and is the main
premise of our Trading Buy stance. The stock is trading at attractive CY11-12 P/Es
of 9-10x. Share price weakness presents a buying opportunity.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 2,033.5 2,252.0 1,756.6 1,931.9 2,028.4
EBITDA (RM m) 55.2 76.2 86.7 130.5 146.6
EBITDA margins (%) 2.7% 3.4% 4.9% 6.8% 7.2%
Pretax profit (RM m) 44.9 68.2 65.5 95.6 107.0
Net profit (RM m) 21.8 12.7 31.6 52.7 60.3
EPS (sen) 5.5 3.2 7.9 13.3 15.1
EPS growth (%) (68.9%) (41.8%) 149.0% 67.0% 14.3%
P/E (x) 24.8 42.7 17.1 10.3 9.0
Core EPS (sen) 2.5 3.8 7.9 13.3 15.1
Stock Information
Core EPS growth (%) (85.9%) 51.7% 111.0% 67.0% 14.3%
Market cap: RM542m/US$172m Core P/E (x) 54.9 36.2 17.1 10.3 9.0
12-m price range: RM1.39 Gross DPS (sen) 4.7 3.0 2.5 3.0 3.5
RM0.84 Dividend yield (%) 3.4% 2.2% 1.8% 2.2% 2.6%
3-m avg daily vol: 5.0m P/BV (x) 1.2 1.2 0.9 0.9 0.9
No. of shrs (m): 398 ROE (%) 5.3% 2.8% 6.0% 8.8% 10.1%
Est. free float (%): 73.0 Net gearing (%) 6.9% 10.7% 45.8% 55.5% 65.5%
Conv. secs (m): None P/FCFE (x) 6.7 10.5 4.9 4.1 3.7
Major shareholders (%): EV/EBITDA (x) 12.1 9.2 11.4 8.3 8.1
- Mac Ngan Boon 17.3 % change in EPS estimates - - -
- Lembaga Tabung Haji 9.9 CIMB/Consensus (x) 0.72 1.00 1.04
Source: Company, CIMB Research, Bloomberg
1.3 3.50 Engineering was listed on the Main Board of Bursa Malaysia in 1994. Over the years,
3.00
1.2
1.1
2.50 it expanded into infrastructure construction, cranes, shipyard and airports as well as
1.0
2.00
1.50
road maintenance concessions. Through its construction, cranes and shipbuilding
0.9
0.8
1.00
0.50
businesses, it offers exposure to the oil and gas segment. This, plus its concessions,
0.7
De c-09 Ma y-10 Oct-10
0.00
gives it a diversified business model. The group’s earnings are also diversified
Volume 10m (R.H.S ca le ) Muhibba h E ngine e ring geographically as it has exposure to 14 countries – the US, UK, Denmark, Germany,
Source: Bloomberg Syria, Sudan, Bahrain, Qatar, UAE, Yemen, Cambodia, Malaysia, Singapore and
Australia.
Syariah-compliant stock
MALAYSIA
UNDERPERFORM Maintained
Nestle (Malaysia) Berhad RM43.50 @07/12/10
No sugar rush Target: RM38.85
Food & Beverages
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 3,877.1 3,744.2 3,837.2 3,952.3 4,070.8
EBITDA (RM m) 538.9 548.9 610.8 634.9 659.9
EBITDA margins (%) 13.9% 14.7% 15.9% 16.1% 16.2%
Pretax profit (RM m) 441.4 440.3 518.9 544.3 570.5
Net profit (RM m) 340.9 351.8 435.9 457.2 479.1
EPS (sen) 145.4 150.0 185.9 195.0 204.3
Stock Information EPS growth (%) 16.7% 3.2% 23.9% 4.9% 4.8%
Market cap: RM10,201m/US$3,252m P/E (x) 29.9 29.0 23.4 22.3 21.3
12-m price range: RM44.60 Gross DPS (sen) 258.4 202.7 202.7 202.7 202.7
RM32.50 Dividend yield (%) 5.9% 4.7% 4.7% 4.7% 4.7%
3-m avg daily vol: 0.0m P/BV (x) 24.8 20.9 14.0 11.8 9.9
No. of shrs (m): 235 ROE (%) 60.6% 78.2% 71.6% 57.3% 50.7%
Est. free float (%): 19.8 Net gearing (%) 51.3% 61.8% 15.5% 8.6% 3.6%
Conv. secs (m): None P/FCFE (x) 37.3 35.1 20.1 28.3 28.1
Major shareholders (%): EV/EBITDA (x) 19.3 19.1 16.9 16.2 15.5
- Nestle S.A. 72.5 % change in EPS estimates - - -
- EPF 7.7 CIMB/Consensus (x) 1.00 1.00 0.99
Source: Company, CIMB Research, Bloomberg
38.8 3.00
although the company has been steadily expanding its export business, with Asean,
36.8
2.00 Europe and Oceania being its main focus. Nestle became the regional production
34.8
32.8
1.00 centre for Milo and baby cereals after completion of the group’s rationalisation
30.8
De c -09 Ma y-10 Oct-10
0.00
programme in 2003. It is also the global halal hub for the Nestle group. Its
Volume 100k (R.H.S c a le ) Ne s tle (Ma la ys ia ) Be rha d management is renowned for good corporate governance and astute marketing
Source: Bloomberg capabilities.
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Pelikan International Corp Bhd RM1.21 @07/12/10
Flying low in Europe Target: RM1.40
Retail
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 1,286.6 1,153.8 1,798.0 2,013.8 2,315.8
EBITDA (RM m) 108.3 115.6 152.1 155.6 172.1
EBITDA margins (%) 8.4% 10.0% 8.5% 7.7% 7.4%
Pretax profit (RM m) 53.7 58.7 79.4 90.8 115.2
Stock Information Net profit (RM m) 40.5 43.1 65.0 76.2 100.4
EPS (sen) 7.9 8.4 12.7 14.9 19.6
Market cap: RM620m/US$198m EPS growth (%) (56.5%) 6.3% 51.0% 17.2% 31.7%
12-m price range: RM1.37 P/E (x) 15.3 14.4 9.5 8.1 6.2
RM1.02 Gross DPS (sen) 1.8 1.8 1.8 1.8 1.8
3-m avg daily vol: 0.5m Dividend yield (%) 1.5% 1.5% 1.5% 1.5% 1.5%
No. of shrs (m): 513 P/BV (x) 0.8 0.7 0.7 0.7 0.6
Est. free float (%): 35.0 ROE (%) 7.9% 7.7% 9.0% 8.5% 10.2%
Conv. secs (m): None Net gearing (%) 47.8% 54.3% 45.2% 32.6% 21.0%
Major shareholders (%): P/FCFE (x) (55.9) (33.3) (2.4) 6.8 6.4
- Lembaga Tabung Haji 30.3 EV/EBITDA (x) 8.4 8.4 7.0 6.3 5.2
- Loo Hooi Keat 24.3 % change in EPS estimates - - -
- Pembinaan Redzai S/B 5.9 CIMB/Consensus (x) 1.03 0.97 1.03
Source: Company, CIMB Research, Bloomberg
1.2
1.50 can be broken down into three segments: office, writing instruments and hobby/craft,
1.1
1.00 with roughly equal contributions to group sales. More than 80% of revenue comes
1.0 0.50 from Europe. The group has manufacturing plants in Germany, Mexico and Malaysia.
0.9
De c-09 Ma y-10 Oct-10
0.00
In 2010, Pelikan acquired Herlitz, one of Europe’s largest and oldest stationery
Volume 1m (R.H.S ca le ) P e lika n Inte rna tiona l Corp Bhd players. The acquisition almost doubled the group’s revenue and should generate
Source: Bloomberg strong synergies and economies of scale for the group.
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Petra Perdana RM0.77 @07/12/10
In calmer waters Target: RM0.98
Oil & Gas - Equipment & Svs
• Maintain TRADING BUY. We maintain our forecasts and RNAV-based target price
of RM0.98. Petra Perdana remains a TRADING BUY, premised on the expectations
of 1) an earnings recovery, and 2) contract wins by 29.6%-owned Petra Energy
(PENB MK, Not Rated) by year-end. Also, the departure of Tengku Datuk Ibrahim
Petra has eliminated the risk of another fight for control.
• Putting its house back in order. The boardroom tussle, which was a major drag
on operations, finally ended when management received the support of the majority
at an EGM on 20 Jul. The close of this disruptive episode has allowed management
to rebuild after 10 months of less-than-optimal running of the business.
Consequently, vessel utilisation rate improved to 60% in 3Q from around 50% in
2Q.
• Hope floats. Petra Perdana could break even in 4Q, thanks to further improvement
in the vessel utilisation rate, which is now more than 60%. Currently, only two
vessels are without contracts, an improvement on five idle vessels in 2Q.
Meanwhile, associate company Petra Energy is bidding for a sizeable topside
maintenance contract after winning a RM400m Petronas Carigali hook-up and
commissioning (HUC) job on 5 Dec. In addition to an associate contribution, Petra
Perdana could also benefit from the HUC contract by chartering its vessels to Petra
Energy, which will need extra capacity to execute the new contract.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 669.6 605.7 448.7 501.2 536.2
EBITDA (RM m) 163.8 85.3 19.5 84.3 99.3
EBITDA margins (%) 24.5% 14.1% 4.3% 16.8% 18.5%
Pretax profit (RM m) 119.3 48.7 (36.7) 37.9 48.2
Net profit (RM m) 84.9 29.3 (40.3) 31.6 41.9
EPS (sen) 28.5 9.9 (12.0) 7.0 9.3
EPS growth (%) (45.5%) (65.5%) (222.1%) 158.4% 32.5%
P/E (x) 2.7 7.8 nm 11.0 8.3
Core EPS (sen) 21.0 5.7 (9.3) 6.0 8.2
Core EPS growth (%) (19.5%) (72.9%) (264.1%) 163.9% 38.3%
Stock Information
Core P/E (x) 3.7 13.6 nm 12.9 9.4
Market cap: RM347m/US$110m FD core EPS (sen) 21.0 5.7 (7.9) 5.2 7.2
12-m price range: RM1.55 FD core P/E (x) 3.7 13.6 nm 14.7 10.6
RM0.75 Gross DPS (sen) 2.8 2.0 2.0 2.0 2.0
3-m avg daily vol: 3.1m Dividend yield (%) 3.6% 2.6% 2.6% 2.6% 2.6%
No. of shrs (m): 450 P/BV (x) 0.5 0.4 0.4 0.6 0.6
Est. free float (%): 60.8 ROE (%) 19.0% 5.8% (6.9%) 5.3% 7.1%
Conv. secs (m): None Net gearing (%) 35.2% 26.6% 25.1% 24.8% 24.5%
Major shareholders (%): P/FCFE (x) 32.0 38.4 4.9 42.0 41.7
- PNB 18.2 EV/EBITDA (x) 2.8 5.7 26.4 7.2 6.1
- Shamsul & Kho brothers 11.8 % change in EPS estimates - - -
- Lembaga Tabung Haji 9.2 CIMB/Consensus (x) 1.19 0.71 0.82
Source: Company, CIMB Research, Bloomberg
Cash flow from investing (448) (545) (677) (676) (675) -29.0
Debt raised/(repaid) 10 0 46 0 0 -39.0
Equity raised/(repaid) 0 0 0 0 0
-49.0
Dividends paid (6) (4) (5) (6) (6) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others (12) (12) (12) (12) (12)
Cash flow from financing (8) (16) 30 (18) (18)
Change in cash 1 2 48 2 2
Change in net cash/(debt) (9) 2 2 2 2
Ending net cash/(debt) (175) (173) (172) (170) (168)
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Petronas Dagangan Bhd RM11.70 @07/12/10
Refuel for dividends here Target: RM15.40
Oil & Gas - Retail
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 24,367.6 20,687.0 25,395.6 27,932.3 30,782.3
EBITDA (RM m) 1,039.0 1,280.4 1,460.2 1,592.1 1,753.6
EBITDA margins (%) 4.3% 6.2% 5.8% 5.7% 5.7%
Pretax profit (RM m) 810.3 1,046.0 1,220.2 1,341.7 1,492.3
Stock Information Net profit (RM m) 578.7 752.9 883.8 972.5 1,082.1
EPS (sen) 58.2 75.8 89.0 97.9 108.9
Market cap: RM11,623m/US$3,705m EPS growth (%) (12.5%) 30.1% 17.4% 10.0% 11.3%
12-m price range: RM11.80 P/E (x) 20.1 15.4 13.2 12.0 10.7
RM8.55 Gross DPS (sen) 45.0 60.0 85.0 85.0 85.0
3-m avg daily vol: 0.2m Dividend yield (%) 3.8% 5.1% 7.3% 7.3% 7.3%
No. of shrs (m): 993 P/BV (x) 2.2 1.9 1.8 1.6 1.5
Est. free float (%): 24.2 ROE (%) 11.7% 13.2% 14.1% 14.3% 14.4%
Conv. secs (m): None Net cash per share (RM) 0.62 0.69 0.76 0.83 0.91
Major shareholders (%): P/FCFE (x) 23.1 17.7 12.7 12.6 12.5
- Petronas 69.9 EV/EBITDA (x) 10.6 8.6 7.5 6.8 6.1
- EPF 6.0 % change in EPS estimates - - -
- Valuecap 3.3 CIMB/Consensus (x) 1.13 1.17 1.21
Source: Company, CIMB Research, Bloomberg
MALAYSIA
TRADING BUY Maintained
Proton Holdings Bhd RM4.84 @06/12/10
Steering a restructuring course Target: RM5.95
Autos
PROH MK / PROT.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
Financial summary
FYE Mar 2009 2010 2011F 2012F 2013F
Revenue (RM m) 6,518.8 8,226.9 9,001.6 9,531.6 10,012.7
EBITDA (RM m) 347.0 667.2 838.2 915.3 964.0
EBITDA margins (%) 5.3% 8.1% 9.3% 9.6% 9.6%
Pretax profit (RM m) (319.2) 260.9 414.5 458.1 489.6
Net profit (RM m) (301.8) 218.9 360.6 398.5 426.0
EPS (sen) (55.0) 39.9 65.7 72.6 77.6
EPS growth (%) (263.5%) 172.5% 64.7% 10.5% 6.9%
Stock Information P/E (x) nm 12.1 7.4 6.7 6.2
Core EPS (sen) (4.3) 41.2 65.7 72.6 77.6
Market cap: RM2,658m/US$845m Core EPS growth (%) (154.4%) 1,064.4% 59.2% 10.5% 6.9%
12-m price range: RM5.00 Core P/E (x) nm 11.7 7.4 6.7 6.2
RM3.81 Gross DPS (sen) 5.0 20.0 10.0 10.0 10.0
3-m avg daily vol: 0.6m Dividend yield (%) 1.0% 4.1% 2.1% 2.1% 2.1%
No. of shrs (m): 549 P/BV (x) 0.5 0.5 0.5 0.4 0.4
Est. free float (%): 33.5 ROE (%) (5.7%) 4.2% 6.6% 6.8% 6.9%
Conv. secs (m): None Net cash per share (RM) 1.01 2.69 2.10 2.76 3.52
Major shareholders (%): P/FCFE (x) (13.6) 3.7 (6.8) 6.8 6.0
- Khazanah Nasional Bhd 42.7 EV/EBITDA (x) 5.6 1.5 1.6 1.1 0.6
- Employees Provident Fund 12.4 % change in EPS estimates - - -
- Petroliam Nasional Bhd 7.9 CIMB/Consensus (x) 1.13 1.14 1.15
Source: Company, CIMB Research, Bloomberg
MALAYSIA
OUTPERFORM Maintained
Public Bank Bhd RM12.80 @07/12/10
Banking on its tradition of consistency Target: RM16.10
Banks
PBK MK / PUBM.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Net interest income (RM m) 3,727.3 4,036.4 4,745.8 5,499.7 6,283.6
Non-interest income (RM m) 1,609.7 1,874.7 2,036.6 2,254.4 2,454.0
Total income (RM m) 5,739.2 6,124.9 6,998.6 7,992.8 8,999.7
Stock Information Loan loss provisions (RM m) (548.6) (691.0) (596.6) (675.1) (711.8)
Pretax profit (RM m) 3,379.1 3,321.4 4,159.3 4,894.1 5,756.2
Market cap: RM45,209m/US$14,411m
Net profit (RM m) 2,581.2 2,517.3 3,027.3 3,525.5 4,150.3
12-m price range: RM12.84
EPS (sen) 70.1 69.3 85.1 99.8 117.5
RM10.76
EPS growth (%) 20% (1%) 23% 17% 18%
3-m avg daily vol: 2.5m
P/E (x) 18.2 18.5 15.0 12.8 10.9
No. of shrs (m): 3,532
Gross DPS (sen) 87.0 77.2 62.4 73.2 86.2
Est. free float (%): 75.0
Conv. secs (m): None Dividend yield (%) 6.8% 6.0% 4.9% 5.7% 6.7%
Major shareholders (%): P/BV (x) 4.9 4.2 3.5 3.0 2.6
- Tan Sri Dr. Teh Hong Piow 24.1 ROE (%) 27.3% 24.5% 25.2% 25.1% 25.4%
- EPF 9.6 % change in EPS estimates - - -
- Valuecap 3.0 CIMB/Consensus (x) 1.00 1.04 1.08
Source: Company, CIMB Research, Bloomberg
11.2 0.40
with its banking business in Sep 04. The group’s major operations include commercial
10.7 0.20 banking, Islamic banking, investment banking and management of unit trust funds. As
10.2
De c-09 Ma y-10 Oct-10
0.00
part of its overseas expansion, Public acquired HK-based Asia Commercial Bank in
Volume 10m (R.H.S ca le ) P ublic Ba nk Bhd 2006 for HK$4.5bn. It also forged a strategic alliance with ING Asia in 2007 to
Source: Bloomberg distribute the latter’s bancassurance products.
4.60 17.0
16.0
4.10 15.0
14.0
3.60 13.0
12.0
3.10
11.0
10.0
2.60
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 9.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Puncak Niaga Holdings Bhd RM2.54 @06/12/10
Waiting for the takeover lifeboat Target: RM2.89
Water Treatment & Services
• Maintain NEUTRAL. The takeover of water assets in Selangor made little progress
in 2010, which was a disappointment. As the takeover is likely to be protracted, we
remain NEUTRAL on the stock at this juncture but would relook at our call if the
takeover progress picks up. Also intact is our target price of RM2.89, which imputes
a 40% discount to its DCF value to reflect the risks of further delays. Puncak’s
effective takeover price is backed by Splash’s RM4.54/share offer in Mar 10.
• Looking to 2011 for progress on takeover. Although the takeover of water assets
in Selangor has made little headway, we expect it to advance in 2011, with the push
factor being the risk that the concessionaires (PNSB, Syabas, Abass and Splash)
will default on their bond redemptions in 2011. Splash’s bonds, for example, are
due in Jul 2011. A successful takeover of the concessionaires would resolve the
payment issues, which stem from the absence of a water tariff increase for Puncak
Niaga in 2009.
• Takeover likely to remain long-drawn. Unless (i) the payment issues are dealt
with, (ii) consideration is given to Syabas’s outstanding compensation, and (iii) the
state government pushes for a resolution to all the issues, the takeover is likely to
be protracted.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 1,476.1 1,885.4 2,214.8 2,342.1 3,095.9
EBITDA (RM m) 649.6 1,072.3 1,354.4 1,449.5 2,169.4
EBITDA margins (%) 44.0% 56.9% 61.2% 61.9% 70.1%
Pretax profit (RM m) 57.0 313.1 312.4 418.1 701.2
Net profit (RM m) 24.9 142.6 193.2 248.8 330.6
EPS (sen) 6.1 34.7 47.0 60.5 80.4
EPS growth (%) (81.4%) 472.7% 35.5% 28.8% 32.9%
Stock Information
P/E (x) 41.9 7.3 5.4 4.2 3.2
Market cap: RM1,044m/US$332m Gross DPS (sen) 13.5 13.5 13.5 13.5 13.5
12-m price range: RM3.15 Dividend yield (%) 5.3% 5.3% 5.3% 5.3% 5.3%
RM2.38 P/BV (x) 0.7 0.6 0.6 0.5 0.4
3-m avg daily vol: 0.2m ROE (%) 1.7% 9.0% 11.0% 12.7% 14.9%
No. of shrs (m): 411 Net gearing (%) 9.5% 39.9% 40.4% 35.9% N/A
Est. free float (%): 61.1 Net cash per share (RM) N/A N/A N/A N/A 1.26
Conv. secs (m): None P/FCFE (x) (4.5) 1.7 3.3 1.7 0.8
Major shareholders (%): EV/EBITDA (x) 2.0 1.9 1.6 1.5 0.5
- Central Plus (M) Sdn Bhd 30.0 % change in EPS estimates - - -
- EPF 9.0 CIMB/Consensus (x) 1.25 1.30 1.24
Source: Company, CIMB Research, Bloomberg
2.8 2.50 Puncak to operate water treatment plants formerly under the management of
2.6
2.00
1.50
Perbadanan Urus Air Selangor (PUAS). The second concession, awarded in 1995,
2.4
1.00
0.50
allows Puncak to operate a new water treatment plant at Bukit Badoh. Both
2.2
De c-09 Ma y-10 Oct-10
0.00
concessions will expire in 2020. 70%-owned Syabas holds a 30-year concession and
Volume 1m (R.H.S c a le ) P unc a k Nia g a Holding s Bhd is the biggest water supply privatisation in Malaysia.
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
QSR Brands RM5.63 @07/12/10
No birdie for suitors Target: RM6.50
Food & Beverages
• Maintain NEUTRAL. We retain our EPS forecasts and target price of RM6.50,
pegged to an unchanged 16x forward P/E, which factors in a 10% discount to the
average valuation of bigger F&B producers. QSR remains a NEUTRAL after our
recent downgrade which was prompted by the limited share price upside after an
earlier rise on the expectation of a race for control. Our top F&B pick is CI Holdings.
• Not for sale. The statements issued by Kulim and QSR after they turned down the
takeover bids by Carlyle and Idaman Saga as well as the news that Johor Corp has
engaged CIMB to restructure its debt suggest that QSR and KFC Holdings will
remain within Johor Corp, at least for now. We are not disappointed that the two
offers were rejected. Johor Corp has done a commendable job growing the Pizza
Hut and KFC franchises at home and abroad since the emergence of Kulim as the
controlling shareholder of QSR in Jun 06.
• Spicy India. We believe that the main factor that influenced the decision to keep
both companies is the growth opportunities in India. KFC India is now operating
three outlets, which are raking in encouraging monthly sales of RM450,000/outlet
vs. RM250,000/outlet in Malaysia. This may increase KFC India’s chances of taking
over five profitable outlets which are now under Yum!.
• Record average ticket prices. Operationally, QSR and KFCH are at their
strongest. As at end-Sep, the same-store sales growth was encouraging at 5% for
Pizza Hut and 3% for KFC. There were no selling price revisions in 9M10. Also,
average ticket prices remained at all-time highs of RM40 for Pizza Hut and RM20
for KFC for the second consecutive quarter in 2Q10.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 532.8 2,760.3 2,830.9 2,979.5 3,137.9
EBITDA (RM m) 90.0 354.0 400.7 436.1 466.6
EBITDA margins (%) 16.9% 12.8% 14.2% 14.6% 14.9%
Pretax profit (RM m) 97.7 230.3 254.4 274.5 287.4
Net profit (RM m) 85.3 90.9 110.1 125.1 133.2
EPS (sen) 29.8 31.8 38.5 43.7 46.5
EPS growth (%) 8.6% 6.6% 21.1% 13.5% 6.5%
P/E (x) 18.9 17.7 14.6 12.9 12.1
FD core EPS (sen) 26.0 27.7 33.6 38.1 40.6
Stock Information
FD core P/E (x) 21.6 20.3 16.8 14.8 13.9
Market cap: RM1,635m/US$521m Gross DPS (sen) 11.0 13.0 15.0 15.0 15.0
12-m price range: RM6.26 Dividend yield (%) 2.0% 2.3% 2.7% 2.7% 2.7%
RM3.17 P/BV (x) 3.5 3.5 3.5 3.5 3.5
3-m avg daily vol: 1.3m ROE (%) 18.5% 19.8% 24.1% 27.2% 28.7%
No. of shrs (m): 290 Net gearing (%) 39.1% 40.1% 40.8% 40.8% 41.4%
Est. free float (%): 42.1 P/FCFE (x) 80.5 89.9 63.7 47.6 38.4
Conv. secs (m): 40.9 EV/EBITDA (x) 14.7 3.7 3.3 3.0 2.9
Major shareholders (%): % change in EPS estimates - - -
- Kulim 57.9 CIMB/Consensus (x) 0.87 0.87 0.76
Source: Company, CIMB Research, Bloomberg
5.5
5.00 under its belt: Pizza Hut, KFC and Ayamas. The other brands are RasaMas and Life.
5.0
4.00
In Malaysia, the Pizza Hut chain is run by QSR while the KFC and Ayamas chains are
3.00
4.5
2.00
under 51.3%-owned KFC Holdings. The Pizza Hut and KFC brands are owned by
4.0
3.5 1.00 Yum!, which also owns the Long John Silver’s, Taco Bell and A&W brands. The
3.0
De c-09 Ma y-10 Oct-10
0.00
home-grown Ayamas, RasaMas and Life brands are owned by the QSR group. The
Volume 1m (R.H.S ca le ) QS R Bra nds group has a presence in Malaysia, Singapore, Brunei, Cambodia and India. QSR is
Source: Bloomberg 57.9% owned by Kulim, which is 54.3% held by Johor Corp.
MALAYSIA
UNDERPERFORM Maintained
RGB International Bhd RM0.06 @07/12/10
Bad dream coming to an end? Target: RM0.06
Gaming
RGB MK / RGBI.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 227.8 170.2 159.1 238.6 266.4
EBITDA (RM m) 73.7 20.3 45.2 93.2 102.3
EBITDA margins (%) 32.3% 11.9% 28.4% 39.0% 38.4%
Pretax profit (RM m) (3.3) (60.5) (46.2) 5.8 10.0
Net profit (RM m) (2.9) (57.8) (39.0) 4.6 7.9
EPS (sen) (0.3) (5.6) (3.7) 0.4 0.8
EPS growth (%) (107.3%) (1,585.3%) 32.6% 111.9% 70.9%
P/E (x) nm nm nm 13.5 7.9
Stock Information
Core EPS (sen) 1.0 (3.2) (3.7) 0.4 0.8
Market cap: RM69m/US$22m Core EPS growth (%) (78.7%) (427.7%) (17.7%) 111.9% 70.9%
12-m price range: RM0.18 Core P/E (x) 6.2 nm nm 13.5 7.9
RM0.06 Gross DPS (sen) 0.0 0.0 0.0 0.0 0.0
3-m avg daily vol: 0.8m Dividend yield (%) 0.0% 0.0% 0.0% 0.0% 0.0%
No. of shrs (m): 1,151 P/BV (x) 0.3 0.4 0.8 0.7 0.7
Est. free float (%): 25.0 ROE (%) (1.6%) (35.8%) (34.4%) 5.5% 8.7%
Conv. secs (m): None Net gearing (%) 63.6% 82.2% 232.6% 161.5% 92.1%
Major shareholders (%): P/FCFE (x) (2.7) (1.1) (12.6) 1.3 1.0
- Datuk Chuah Kim Seah 29.4 EV/EBITDA (x) 2.3 9.0 5.3 2.1 1.4
- Gerak Juara Sdn Bhd 14.1 % change in EPS estimates - - -
- Chuah Kim Chiew 2.3 CIMB/Consensus (x) 1.01 1.11 0.95
Source: Company, CIMB Research, Bloomberg
MALAYSIA
OUTPERFORM Maintained
RHB Capital Bhd RM8.59 @07/12/10
Surfing on brisk loan growth Target: RM10.50
Banks
RHBC MK / RHBC.KL Winson Ng Gia Yann CFA +60(3) 2084 9686 – winson.ng@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Net interest income (RM m) 2,216.4 2,413.2 2,737.1 3,014.1 3,330.2
Non-interest income (RM m) 841.3 946.4 1,188.9 1,372.9 1,427.7
Total income (RM m) 3,445.1 3,665.0 4,243.8 4,722.3 5,113.8
Stock Information Loan loss provisions (RM m) (499.6) (578.8) (595.3) (629.1) (581.3)
Pretax profit (RM m) 1,422.4 1,538.5 1,941.7 2,280.3 2,620.9
Market cap: RM18,498m/US$5,897m
Net profit (RM m) 1,048.7 1,201.4 1,455.2 1,701.0 1,956.5
12-m price range: RM8.59
EPS (sen) 48.7 55.8 67.6 79.0 90.9
RM5.17
EPS growth (%) 36% 15% 21% 17% 15%
3-m avg daily vol: 2.1m
P/E (x) 17.6 15.4 12.7 10.9 9.5
No. of shrs (m): 2,153
Gross DPS (sen) 19.6 22.5 27.0 31.6 36.3
Est. free float (%): 17.5
Conv. secs (m): None Dividend yield (%) 2.3% 2.6% 3.1% 3.7% 4.2%
Major shareholders (%): P/BV (x) 2.4 2.1 1.9 1.7 1.5
- EPF 54.0 ROE (%) 14.1% 14.5% 15.8% 16.6% 16.9%
- Abu Dhabi Commercial 25.0 % change in EPS estimates - - -
- Amanah Saham Bumiputera 2.0 CIMB/Consensus (x) 1.05 1.09 1.10
7.9
0.80
0.70
RM127.1bn. RHB Bank started out as D&C Bank and merged with Kwong Yik Bank in
7.4 0.60
0.50
1997, Sime Bank in 1999 and Utama Bank in 2002. In 1H07, EPF acquired 82% of
6.9
6.4
0.40
0.30
RHB Capital via its full control of RHB and a general offer. Subsequently, the group
5.9
5.4
0.20
0.10
embarked on corporate exercises to acquire the remaining 30% stake in RHB Bank on
4.9
De c-09 Ma y-10 Oct-10
0.00
12 Jul 07 and refinance the INCPS in 1Q08. EPF sold a 25% stake in RHB Capital to
Volume 10m (R.H.S ca le ) RHB Ca pita l Bhd Abu Dhabi Commercial Bank on 8 May 08. In Oct 09, the group announced the
Source: Bloomberg acquisition of an 80% stake in PT Bank Mestika, which will be completed in 1Q11.
1.90
12.0
1.70 11.0
10.0
1.50
9.0
1.30 8.0
1.10 7.0
6.0
0.90
5.0
0.70 4.0
Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
SapuraCrest Petroleum RM2.82 @07/12/10
Pumped up by a huge order book Target: RM3.30
Oil & Gas - Equipment & Svs
• Maintain OUTPERFORM. We maintain our forecasts but raise our target price from
RM3.14 to RM3.30, pegged to a revised target market P/E of 14.5x (13.8x
previously). SapuraCrest remains an OUTPERFORM and our top pick in the oil &
gas sector. The potential re-rating catalysts are 1) active order book replenishment,
2) success in new markets (i.e. Australia, Japan and the Middle East), and 3) a
growing fleet of strategic assets (i.e. pipelay barges and drilling rigs).
• Fleet expansion. Two new pipelay barges, namely the LTS3000 and the Quippo
Prakash, joined the Sapura3000 this year. The barges are held through JVs with
Indian partners. Through the partnerships, SapuraCrest will have access to the
sought-after barges without having to incur an otherwise substantial capital outlay.
The two new barges are suitable for shallow-water works while the Sapura3000 is a
deepwater barge. The Sapura3000 will be used to execute the recently-announced
US$160m Montara decommissioning project in Australia. We believe the ownership
of the barge tilted the odds in SapuraCrest’s favour.
• RM13.6bn order book. To date, SapuraCrest has clinched three contracts valued
at RM935m inclusive of the Montara contract. The estimated order book value
stands at RM13.6bn, of which 84% comes from the installation of pipelines and
facilities activities. The jobs in hand will keep the company busy for the next four
years. Although management concedes that the flow has contracts has slowed
significantly this year, it foresees an increase in deepwater activities in Asia
(Malaysia, Indonesia, India and China) and Australia in the next three years.
Financial summary
FYE Jan 2009 2010 2011F 2012F 2013F
Revenue (RM m) 3,483.8 3,257.3 4,245.3 4,661.2 5,117.7
EBITDA (RM m) 463.4 339.0 589.6 649.2 678.6
EBITDA margins (%) 13.3% 10.4% 13.9% 13.9% 13.3%
Pretax profit (RM m) 280.0 364.4 458.4 550.1 601.7
Stock Information Net profit (RM m) 114.7 170.2 213.5 272.5 290.9
EPS (sen) 9.0 13.4 16.8 21.4 22.8
Market cap: RM3,600m/US$1,148m EPS growth (%) 37.1% 47.9% 25.4% 27.6% 6.7%
12-m price range: RM2.83 P/E (x) 31.2 21.1 16.8 13.2 12.3
RM1.89 Gross DPS (sen) 5.0 7.0 8.0 9.0 10.0
3-m avg daily vol: 1.6m Dividend yield (%) 1.8% 2.5% 2.8% 3.2% 3.5%
No. of shrs (m): 1,277 P/BV (x) 3.8 4.2 4.0 3.7 3.7
Est. free float (%): 28.1 ROE (%) 13.2% 18.8% 24.2% 29.3% 30.2%
Conv. secs (m): None Net gearing (%) 25.1% 19.4% 13.1% 7.2% 1.7%
Major shareholders (%): P/FCFE (x) 13.2 35.6 32.2 29.2 25.7
- Sapura Technology 40.1 EV/EBITDA (x) 9.3 13.0 7.4 6.8 6.5
- Seadrill 23.6 % change in EPS estimates - - -
- EPF 8.2 CIMB/Consensus (x) 0.96 1.09 0.97
Source: Company, CIMB Research, Bloomberg
0.40
the Main Board in Feb 06. Today, SapuraCrest is the leader in drilling and installation
2.3
2.1
0.30 of pipelines and facilities, which are the company’s two biggest income generators
0.20
1.9 0.10
with more than 80% contribution. Other businesses are marine services and
1.7
De c-09 Ma y-10 Oct-10
0.00
operations & maintenance. SapuraCrest owns a fleet of assets, which include drilling
Volume 10m (R.H.S ca le ) S a pura Cre s t P e trole um rigs, barges and support vessels. The rigs are jointly owned with Seadrill, which is
Source: Bloomberg also a substantial shareholder.
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Sime Darby Bhd RM8.74 @07/12/10
Making a fresh start Target: RM10.78
Conglomerate
SIME MK / SIME.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
• Maintain TRADING BUY. We continue to like Sime Darby for its attractive
valuations, its new management’s restructuring efforts and the potential turnaround
of its energy and utilities (E&U) division. Its CY12 P/E of 14.5x is below the ratings
of other big-cap plantation plays in Malaysia. There is earnings upside if the group
succeeds in selling some of its non-core assets, enhancing the value of its property
landbank and turning around its loss-making E&U unit. Our EPS forecasts are
unchanged but we raise our SOP-based target price from RM9.84 to RM10.78 as
we apply a higher plantation P/E multiple of 17x (prev. 16x) and remove the 5%
SOP discount given management’s restructuring efforts. Potential share price
triggers include rising CPO price and better-than-expected earnings.
• Better earnings prospects. We project an 18% rise in Sime’s FY11 net profit due
to higher earnings contribution from all major business segments and lower losses
from its oil and gas division.
• Sime’s KPIs below estimates. Sime Darby’s FY11 KPI targets include a net profit
of RM2.5bn and an ROE of 11.5%. The net profit target is 15% below our forecast
due to lower sales estimates for the non-plantation divisions. We suspect that Sime
is choosing to err on the conservative side given the uncertain external markets.
The disappointing KPI target is offset by the group’s plans to unlock the value of its
property landbank and its expectation of a narrowing of oil & gas losses if it secures
some local projects soon.
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 31,013.7 32,951.6 35,659.2 37,585.9 39,413.9
EBITDA (RM m) 3,901.0 2,805.0 5,384.2 6,245.4 6,705.7
EBITDA margins (%) 12.6% 8.5% 15.1% 16.6% 17.0%
Pretax profit (RM m) 3,071.6 1,741.5 4,186.7 4,948.9 5,290.2
Net profit (RM m) 2,280.1 726.8 2,943.2 3,479.1 3,719.0
EPS (sen) 37.9 12.1 49.0 57.9 61.9
EPS growth (%) (35.1%) (68.1%) 305.0% 18.2% 6.9%
P/E (x) 23.0 72.3 17.8 15.1 14.1
Stock Information Core EPS (sen) 37.9 48.2 49.0 57.9 61.9
Core EPS growth (%) (34.8%) 27.1% 1.6% 18.2% 6.9%
Market cap: RM52,523m/US$16,743m Core P/E (x) 23.0 18.1 17.8 15.1 14.1
12-m price range: RM9.10 Gross DPS (sen) 25.7 13.6 33.1 39.1 41.8
RM7.50 Dividend yield (%) 2.9% 1.6% 3.8% 4.5% 4.8%
3-m avg daily vol: 6.3m P/BV (x) 2.5 2.6 2.3 2.1 2.0
No. of shrs (m): 6,009 ROE (%) 10.6% 3.5% 13.5% 14.4% 14.3%
Est. free float (%): 38.1 Net gearing (%) 8.9% 12.1% 23.0% 22.0% 21.5%
Conv. secs (m): None P/FCFE (x) 1,346.7 18.9 20.3 30.3 23.7
Major shareholders (%): EV/EBITDA (x) 13.8 19.5 10.8 9.3 8.8
- Permodalan Nasional 53.0 % change in EPS estimates - - -
- Employees Provident Fund 15.7 CIMB/Consensus (x) 0.94 1.02 1.00
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
SP Setia Bhd RM5.24 @07/12/10
Raring for the good fight Target: RM6.88
Property Devt & Invt
• Still our top property pick. FY10/10 was an excellent year for SP Setia as
property sales amounted to RM2.31bn, beating its full-year target of RM2bn. SP
Setia is aiming to sell RM3bn worth of properties in FY11, a figure we believe is
achievable. The group may not be actively seeking M&A partners but is on an
aggressive landbanking and organic growth path. In view of its excellent execution
track record, it stands a good chance of keeping its position as the top developer in
terms of sales and profit. We maintain our OUTPERFORM recommendation and
target price of RM6.88, based on an unchanged 20% premium over its FD RNAV of
RM5.73. Potential re-rating catalysts include 1) continued robust sales, 2) newsflow
on landbanking and 3) strong earnings growth. SP Setia remains our top pick in the
property sector.
• KL EcoCity excitement. The RM6bn KL EcoCity project will be launched in
Jan/Feb 2011. The commercial component of the first phase is worth RM1bn while
the residential portion is worth RM800m. Pricing of both the office space and
residential properties is at least RM1,000 psf. Despite the high selling price,
indicative demand is very strong, being 2-3x the available supply. The attraction of
the project, besides its strategic location next to Bandar MidValley, is its excellent
accessibility. The LRT, KTM and MRT will all stop at the project.
Financial summary
FYE Oct 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,408.4 1,745.9 1,934.6 2,398.5 2,346.2
EBITDA (RM m) 194.6 293.6 367.5 468.6 477.8
EBITDA margins (%) 13.8% 16.8% 19.0% 19.5% 20.4%
Pretax profit (RM m) 231.1 331.0 377.7 485.7 499.2
Net profit (RM m) 171.2 251.8 283.3 364.3 374.4
EPS (sen) 16.8 24.8 27.9 35.8 36.8
EPS growth (%) (19.8%) 47.1% 12.5% 28.6% 2.8%
P/E (x) 31.2 21.1 18.8 14.6 14.2
Core EPS (sen) 16.3 21.1 27.9 35.8 36.8
Core EPS growth (%) (14.7%) 30.0% 31.8% 28.6% 2.8%
Stock Information
Core P/E (x) 32.1 24.8 18.8 14.6 14.2
Market cap: RM5,674m/US$1,808m FD core EPS (sen) 14.0 18.1 23.9 30.7 31.6
12-m price range: RM5.36 FD core P/E (x) 40.0 30.8 23.3 18.2 17.7
RM3.53 Gross DPS (sen) 14.0 20.0 22.0 24.0 26.0
3-m avg daily vol: 2.3m Dividend yield (%) 2.7% 3.8% 4.2% 4.6% 5.0%
No. of shrs (m): 1,017 P/BV (x) 2.8 2.6 2.5 2.3 2.1
Est. free float (%): 57.0 ROE (%) 8.5% 11.9% 12.6% 15.2% 14.5%
Conv. secs (m): 168.2 Net gearing (%) 27.1% 26.4% 15.0% 11.3% 8.1%
Major shareholders (%): P/FCFE (x) 13.3 17.7 11.1 15.0 13.8
- PNB 31.0 EV/EBITDA (x) 31.9 21.2 16.3 12.6 12.3
- EPF 16.0 % change in EPS estimates N/A N/A N/A
- Tan Sri Liew Kee Sin 12.0 CIMB/Consensus (x) 1.15 1.29 N/A
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Star Publications Bhd RM3.39 @06/12/10
Still a dividend play Target: RM4.52
Newspaper
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 831.0 974.4 1,189.9 1,284.1 1,337.3
EBITDA (RM m) 223.7 232.3 305.6 337.5 365.7
EBITDA margins (%) 26.9% 23.8% 25.7% 26.3% 27.3%
Pretax profit (RM m) 201.3 197.1 271.3 293.7 325.4
Net profit (RM m) 138.7 144.6 184.3 193.5 230.3
EPS (sen) 18.8 19.6 25.0 26.2 31.2
EPS growth (%) (13.0%) 4.2% 27.5% 5.0% 19.0%
P/E (x) 18.0 17.3 13.6 12.9 10.9
Core EPS (sen) 22.1 19.6 25.0 26.2 31.2
Stock Information
Core EPS growth (%) 2.3% (11.3%) 27.5% 5.0% 19.0%
Market cap: RM2,504m/US$798m Core P/E (x) 15.4 17.3 13.6 12.9 10.9
12-m price range: RM4.13 Gross DPS (sen) 21.1 21.0 73.6 21.0 21.0
RM3.14 Dividend yield (%) 6.2% 6.2% 21.7% 6.2% 6.2%
3-m avg daily vol: 1.0m P/BV (x) 2.0 2.0 2.3 2.2 2.0
No. of shrs (m): 739 ROE (%) 11.2% 11.4% 15.8% 17.6% 19.4%
Est. free float (%): 76.1 Net cash per share (RM) 0.44 0.47 0.05 0.14 0.29
Conv. secs (m): None P/FCFE (x) 20.2 14.3 36.5 13.0 10.9
Major shareholders (%): EV/EBITDA (x) 9.7 9.3 8.1 7.2 6.3
- EPF 16.6 % change in EPS estimates - - -
- Amanah Raya Nominees 7.3 CIMB/Consensus (x) 1.04 1.02 1.09
Source: Company, CIMB Research, Bloomberg
3.7 3.00
operates two radio stations. The Star (English) online newspaper was the first in
3.5
2.00 Malaysia to establish its presence on the Internet and is recognised as the most
3.3
3.1
1.00 widely read in Malaysia. In 2008, Star acquired a stake in Cityneon for exposure to
2.9
Dec-09 May-10 Oct-10
0.00
the meetings, incentives, conventions and exhibitions (MICE) sector in Asia and the
Volume 1m (R.H.Scale) Star Publications Bhd Middle East. The Star is the single largest source of adex in the country and extended
Source: Bloomberg its coverage to East Malaysia in late 2009.
Cash flow from investing (50) (49) (48) (47) (46) 13.0
Debt raised/(repaid) 0 0 0 0 0 12.5
Equity raised/(repaid) 0 0 0 0 0
12.0
Dividends paid (117) (117) (379) (124) (124) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 65 (11) 19 9 12
Cash flow from financing (51) (128) (360) (115) (112)
Change in cash 51 24 (310) 69 105
Change in net cash/(debt) 51 24 (310) 69 105
Ending net cash/(debt) 323 347 37 106 211
Source: Company, CIMB Research, Bloomberg
MALAYSIA
OUTPERFORM Maintained
Supermax Corp Bhd RM4.38 @07/12/10
Supercharged Target: RM8.22
Rubber Gloves
• Reiterate OUTPERFORM. Supermax, the most liquid rubber glove stock, remains
an OUTPERFORM. Our EPS forecasts are unchanged. However, our target price
increases from RM7.82 to RM8.22 after raising Top Glove’s CY11 target P/E from
13.8x to 14.5x while maintaining Supermax at a 20% discount to Top Glove or
11.6x P/E. Potential re-rating catalysts include 1) higher nitrile glove sales, 2)
refurbishment of the company’s Sungai Buloh plant to manufacture surgical gloves,
and 3) tax savings from the company’s regional distribution hub in Malaysia.
• Unique business model. Supermax’s own brand gloves make up 63% of its sales,
making it the sector’s largest original brand glovemaker and giving it superior
pricing power. Through its ownership of distributors, the group has gained its own
distribution channels that give it direct access to customers. Distribution income
now accounts for 44% of net profit compared with just 21% in 2001.
• Flexible glovemaking capabilities. 60-70% of Supermax’s production lines are
dual mode, enabling the company to switch seamlessly between natural rubber and
nitrile glove production. In our view, this enhances Supermax’s ability to gain market
share and maintain high utilisation rates by meeting market demand quickly.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 811.8 803.6 946.5 1,184.2 1,381.4
EBITDA (RM m) 98.9 169.0 226.4 261.5 306.2
EBITDA margins (%) 12.2% 21.0% 23.9% 22.1% 22.2%
Pretax profit (RM m) 52.0 151.5 216.2 245.5 283.5
Net profit (RM m) 47.0 126.6 183.8 208.7 241.0
EPS (sen) 13.8 37.2 54.0 61.4 70.9
EPS growth (%) (16.0%) 169.3% 45.2% 13.5% 15.5%
P/E (x) 31.7 11.8 8.1 7.1 6.2
Stock Information Core EPS (sen) 18.2 38.5 54.0 61.4 70.9
Core EPS growth (%) 10.9% 111.2% 40.2% 13.5% 15.5%
Market cap: RM1,490m/US$475m Core P/E (x) 24.0 11.4 8.1 7.1 6.2
12-m price range: RM6.55 Gross DPS (sen) 2.6 8.8 9.0 11.0 12.0
RM3.11 Dividend yield (%) 0.6% 2.0% 2.1% 2.5% 2.7%
3-m avg daily vol: 2.7m P/BV (x) 3.6 2.7 2.0 1.6 1.3
No. of shrs (m): 340 ROE (%) 11.7% 26.0% 28.0% 24.7% 23.1%
Est. free float (%): 49.3 Net gearing (%) 90.0% 31.5% 14.0% 0.5% N/A
Conv. secs (m): None Net cash per share (RM) N/A N/A N/A N/A 0.42
Major shareholders (%): P/FCFE (x) 58.1 13.9 13.4 8.2 6.4
- Thai Kim Sim, Stanley 20.7 EV/EBITDA (x) 17.7 8.9 6.3 5.0 3.8
- Tan Bee Geok, Cheryl 14.8 % change in EPS estimates N/A N/A N/A
- Koperasi Permodalan Felda 5.2 CIMB/Consensus (x) 1.01 1.06 1.08
Source: Company, CIMB Research, Bloomberg
5.9
0.80
0.70
It is Malaysia’s first and largest original brand glove manufacturer, with brands such
5.4
4.9
0.60
0.50
as Supermax, Aurelia and Maxter. Although traditionally a natural rubber glovemaker,
4.4 0.40
0.30
Supermax has ramped up nitrile glove production to 20-24% of capacity. Today, the
3.9
3.4
0.20
0.10
company produces 16.5bn pieces of gloves p.a., meeting 11% of the world’s glove
2.9
Dec-09 May-10 Oct-10
0.00
demand. Supermax also has six of its own distribution centres in the US, Brazil,
Volume 10m (R.H.Scale) Supermax Corp Bhd Germany, Belgium and Canada.
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Tan Chong Motor Holdings Bhd RM5.44 @06/12/10
Following a regional roadmap Target: RM9.15
Autos
TCM MK / TNCS.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
• Maintain OUTPERFORM; top auto pick. Although Tan Chong’s share price has
risen 73% relative to the KLCI’s 18%, we still see value in the stock. It is trading at
close to 10% discount to its average historical P/E of 8.5x. In addition to the
strategic expansion of its model mix and excitement from its regional plans, we
think that Tan Chong is a good cyclical play on the economy. We continue to rate it
an OUTPERFORM and our top pick in the auto sector. Potential re-rating catalysts
include 1) a stronger earnings growth trajectory, 2) new model pipeline, and 3)
strategic positioning which will help it tap into regional demand. Our SOP-based
target price stays at RM9.15.
• New models to drive earnings growth next year. For 2011, Tan Chong plans to
launch three new facelifts, two new CKD models and two CBUs. Among them will
be the Nissan March, which is currently produced by Nissan’s Thai plant with a
localisation rate of close to 90%. This model is expected to hit Malaysian shores
towards end-2011. 2011 will also capture the full-year contribution from Nissan
Teana, which was officially launched on 23 Nov 10. The launch of the Teana
marked Nissan’s re-entry into the D-segment after a five-year hiatus.
• Building a platform for sustainable growth. Tan Chong’s FY11-12 earnings
should be largely driven by the domestic market. However, the group is building a
regional platform that should provide a new leg of growth post FY12 when the local
auto industry will be closer to saturation point. Having gained a foothold in the
Indochina region, Tan Chong is paving the way for a possible entry into Indonesia.
It was recently awarded a manufacturing licence in Sabah that could give the group
a springboard into Indonesia given Sabah’s proximity to Kalimantan and Sulawesi.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 3,195.8 2,856.9 3,518.8 4,072.0 5,314.8
EBITDA (RM m) 374.9 234.0 451.5 516.3 696.9
EBITDA margins (%) 11.7% 8.2% 12.8% 12.7% 13.1%
Pretax profit (RM m) 307.2 177.2 393.3 458.5 636.7
Stock Information Net profit (RM m) 245.8 153.3 274.4 342.9 476.6
EPS (sen) 36.6 22.8 40.8 51.0 70.9
Market cap: RM3,656m/US$1,162m EPS growth (%) 318.6% (37.6%) 78.9% 25.0% 39.0%
12-m price range: RM6.00 P/E (x) 14.9 23.8 13.3 10.7 7.7
RM2.46 Gross DPS (sen) 10.0 11.0 12.0 13.0 14.0
3-m avg daily vol: 0.7m Dividend yield (%) 1.8% 2.0% 2.2% 2.4% 2.6%
No. of shrs (m): 672 P/BV (x) 2.6 2.4 2.1 1.8 1.5
Est. free float (%): 37.0 ROE (%) 18.5% 10.4% 16.9% 18.4% 21.6%
Conv. secs (m): None Net gearing (%) 17.5% 6.3% 7.2% 0.4% 0.4%
Major shareholders (%): P/FCFE (x) 58.0 37.1 183.7 17.8 35.5
- Tan Chong Consolidated 45.6 EV/EBITDA (x) 10.4 16.0 8.3 7.1 5.2
- Nissan Motor Corp 5.6 % change in EPS estimates - - -
- Employees Provident Fund 5.2 CIMB/Consensus (x) 1.03 1.03 1.18
Source: Company, CIMB Research, Bloomberg
5.3 5.00
Renault marques in Malaysia. It is 5.6% owned by Nissan Motor Japan. Through
4.8
4.3
4.00 Nissan and Renault, Tan Chong accounts for close to 6% share of total vehicle sales
3.8
3.00
2.00
in Malaysia currently compared with a mere 3.8% in 2007. Beyond the domestic
3.3
2.8 1.00 market, Tan Chong holds the exclusive distribution rights for Nissan vehicles in
2.3
De c-09 Ma y-10 Oct-10
0.00
Cambodia and Laos. Recently, it rounded off its Indochina strategy with the proposed
Volume 1m (R.H.S ca le ) Ta n Chong Motor Holdings Bhd acquisition of a 74% stake in the exclusive importer and distributor of Nissan vehicles
Source: Bloomberg in Vietnam.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Tasek Corporation Bhd RM7.59 @07/12/10
Concrete prospects Target: RM9.00
Cement
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 509.8 526.8 575.9 611.2 620.6
EBITDA (RM m) 122.6 124.2 139.0 157.1 158.8
EBITDA margins (%) 24.0% 23.6% 24.1% 25.7% 25.6%
Pretax profit (RM m) 98.6 87.2 161.4 174.5 135.9
Net profit (RM m) 75.1 67.1 121.0 130.9 101.9
EPS (sen) 40.7 36.3 97.9 105.9 82.4
Stock Information EPS growth (%) 99.8% (10.8%) 169.6% 8.2% (22.1%)
Market cap: RM938m/US$299m P/E (x) 18.7 20.9 7.8 7.2 9.2
12-m price range: RM8.57 Core EPS (sen) 40.7 36.3 66.7 79.4 82.4
RM5.66 Core EPS growth (%) 99.8% (10.8%) 83.6% 19.2% 3.8%
3-m avg daily vol: 0.0m Core P/E (x) 18.7 20.9 11.4 9.6 9.2
No. of shrs (m): 124 P/BV (x) 1.6 1.5 1.1 1.0 0.9
Est. free float (%): 11.8 ROE (%) 9.2% 7.6% 13.7% 14.3% 9.9%
Conv. secs (m): None Net cash per share (RM) 1.39 1.90 3.00 3.82 4.75
Major shareholders (%): P/FCFE (x) 27.4 13.0 12.9 5.2 6.9
- HL Cement (M) Sdn Bhd 72.6 EV/EBITDA (x) 9.0 8.5 4.1 3.0 2.2
- Amanah Raya 8.6 % change in EPS estimates N/A N/A N/A
- Lembaga Tabung Haji 6.5 CIMB/Consensus (x) 0.68 0.75 1.01
Source: Company, CIMB Research, Bloomberg
7.3 15.00
rated production capacity of 250,000 tonnes at its present plant in the Tasek Industrial
6.8
10.00 Estate, Ipoh. Over the years, it undertook a series of expansion to keep pace with
6.3
5.8
5.00 Malaysia’s economic and infrastructure development. Its continuous upgrade of its
5.3
Dec-09 May-10 Oct-10
0.00
plants, equipment and technology has pushed its capacity to 2.3m mt of clinker per
Volume 100k (R.H.Scale) Tasek Corporation Bhd year. Tasek now ranks as the fourth largest cement player in the country.
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Telekom Malaysia Bhd RM3.41 @07/12/10
Capital management potential Target: RM4.04
Telecommunications - Integrated
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 8,674.9 8,608.0 8,715.9 8,910.4 9,075.8
EBITDA (RM m) 2,738.4 2,936.8 2,806.5 2,453.1 2,553.1
EBITDA margins (%) 31.6% 34.1% 32.2% 27.5% 28.1%
Pretax profit (RM m) 353.8 921.6 1,254.0 916.1 1,056.6
Net profit (RM m) 167.0 643.0 970.2 613.4 717.4
EPS (sen) 4.8 18.2 27.2 17.1 19.9
EPS growth (%) (83.9%) 277.8% 49.4% (37.0%) 16.4%
P/E (x) 70.8 18.8 12.5 19.9 17.1
Stock Information Core EPS (sen) 20.4 17.3 16.3 7.3 10.0
Market cap: RM12,199m/US$3,889m Core EPS growth (%) 28.7% (15.1%) (6.2%) (55.0%) 37.1%
12-m price range: RM3.58 Core P/E (x) 16.7 19.7 20.9 46.6 34.0
RM2.99 Gross DPS (sen) 27.3 124.4 43.0 26.0 25.9
3-m avg daily vol: 6.2m Dividend yield (%) 8.0% 36.5% 12.6% 7.6% 7.6%
No. of shrs (m): 3,577 P/BV (x) 1.2 1.7 1.7 1.9 2.0
Est. free float (%): 34.8 ROE (%) 1.7% 7.5% 13.7% 9.2% 11.6%
Conv. secs (m): None Net gearing (%) 44.2% 41.1% 37.0% 47.2% 39.0%
Major shareholders (%): P/FCFE (x) (65.9) 2.8 106.3 11.2 8.4
- Khazanah Nasional 43.1 EV/EBITDA (x) 6.1 5.2 5.4 6.3 5.9
- Employees Provident Fund 16.2 % change in EPS estimates - - -
- Amanah Saham Bumi 5.9 CIMB/Consensus (x) 0.85 0.45 0.56
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
TRADING BUY Maintained
Tenaga Nasional Bhd RM8.44 @07/12/10
Sparks to fly soon? Target: RM10.55
Power
TNB MK / TENA.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Aug 2009 2010 2011F 2012F 2013F
Revenue (RM m) 28,785.6 30,320.1 31,812.0 33,337.3 34,299.6
EBITDA (RM m) 7,260.4 8,208.4 7,956.7 8,360.0 8,794.1
EBITDA margins (%) 25.2% 27.1% 25.0% 25.1% 25.6%
Pretax profit (RM m) 1,543.1 4,022.1 3,661.8 3,859.3 4,123.6
Net profit (RM m) 917.9 3,201.9 2,982.2 3,110.2 3,303.5
EPS (sen) 21.2 73.6 68.5 71.5 75.9
EPS growth (%) (64.6%) 247.6% (6.9%) 4.3% 6.2%
P/E (x) 39.9 11.5 12.3 11.8 11.1
Stock Information
Core EPS (sen) 56.7 63.5 63.0 69.4 75.9
Market cap: RM36,799m/US$11,731m Core EPS growth (%) (4.0%) 11.9% (0.8%) 10.2% 9.4%
12-m price range: RM9.24 Core P/E (x) 14.9 13.3 13.4 12.2 11.1
RM7.81 Gross DPS (sen) 17.8 26.0 22.7 24.7 24.0
3-m avg daily vol: 7.6m Dividend yield (%) 2.1% 3.1% 2.7% 2.9% 2.8%
No. of shrs (m): 4,360 P/BV (x) 1.4 1.3 1.2 1.1 1.0
Est. free float (%): 36.0 ROE (%) 3.6% 11.7% 10.0% 9.8% 9.7%
Conv. secs (m): None Net gearing (%) 63.1% 44.8% 35.0% 28.2% 21.0%
Major shareholders (%): P/FCFE (x) 50.4 15.9 60.1 69.9 89.0
- Khazanah Nasional 35.7 EV/EBITDA (x) 7.3 6.0 5.9 5.5 5.0
- Employees Provident Fund 12.5 % change in EPS estimates - - -
- Skim ASB 9.6 CIMB/Consensus (x) 0.95 0.95 0.95
Source: Company, CIMB Research, Bloomberg
Cash flow from operations 6,681 7,609 8,606 7,892 8,124 13.0
Capex (4,128) (3,708) (4,530) (5,200) (5,200)
Net investments & sale of FA 66 (74) 0 0 0 12.0
Others 230 0 0 0 0
11.0
Cash flow from investing (3,833) (3,782) (4,530) (5,200) (5,200)
Debt raised/(repaid) (1,205) (703) (2,786) (1,533) (1,888) 10.0
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Tomypak Holdings RM1.00 @07/12/10
A solid package Target: RM1.80
Packaging
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 182.8 159.1 182.9 194.6 212.2
EBITDA (RM m) 18.1 31.6 27.1 36.9 40.2
EBITDA margins (%) 9.9% 19.9% 14.8% 19.0% 18.9%
Pretax profit (RM m) 7.9 20.8 17.0 27.5 30.5
Net profit (RM m) 7.6 20.1 15.6 24.8 27.1
EPS (sen) 7.6 20.1 14.5 23.0 25.3
EPS growth (%) 406.7% 164.5% (27.6%) 58.2% 9.7%
Stock Information
P/E (x) 13.2 5.0 6.9 4.3 4.0
Market cap: RM109m/US$35m Gross DPS (sen) 1.6 6.5 7.4 8.5 9.6
12-m price range: RM1.52 Dividend yield (%) 1.6% 6.5% 7.4% 8.5% 9.6%
RM0.65 P/BV (x) 1.7 1.3 1.2 1.0 0.9
3-m avg daily vol: 0.2m ROE (%) 12.9% 26.1% 19.1% 25.8% 23.7%
No. of shrs (m): 109 Net gearing (%) 58.8% 11.5% 8.1% N/A N/A
Est. free float (%): 40.0 Net cash per share (RM) N/A N/A N/A 0.18 0.30
Conv. secs (m): None P/FCFE (x) 250.0 3.6 13.6 3.4 5.1
Major shareholders (%): EV/EBITDA (x) 7.4 3.4 4.2 2.4 1.9
- Chow family 32.0 % change in EPS estimates - - -
- Lim Hun Swee 13.6 CIMB/Consensus (x) 0.86 1.00 1.01
Source: Company, CIMB Research, Bloomberg
1.4 6.00
producer, was listed on the Main Board in 1996. Its founder, the Chow family remains
1.2
5.00
4.00
the group’s largest shareholder with around 32% equity stake. Management and
1.0 3.00 direction of the group is driven by its MD Chow Yuen Liong who has been with
0.8
2.00
1.00
Tomypak since 1980. Tomypak handles mainly the demands of MNCs in Malaysia.
0.6
De c-09 Ma y-10 Oct-10
0.00
MNC customers include Nestle, Kraft and Unilever. Local customers include Apollo
Volume 1m (R.H.S ca le ) Tomypa k Holding s Food, Zhulian and Mamee-Double Decker. The group has been supplying to Nestle
Source: Bloomberg since 1980.
Others 0 0 0 0 0
2.0
Cash flow from investing (6) (11) (8) (7) (7)
Debt raised/(repaid) (3) 0 0 (2) 0 1.0
Equity raised/(repaid) 0 0 0 0 0
0.0
Dividends paid 0 (5) (6) (7) (8) Dec-07 Apr-08 Aug-08 Dec-08 Apr-09 Aug-09 Dec-09 Apr-10 Aug-10 Dec-10
Cash interest & others 0 3 0 0 0
Cash flow from financing (3) (2) (6) (8) (8)
Change in cash 0 26 2 24 13
Change in net cash/(debt) 3 26 2 26 13
Ending net cash/(debt) (35) (9) (7) 19 32
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Top Glove Corporation RM5.55 @07/12/10
It’s a whole new ball game Target: RM7.27
Rubber Gloves
Financial summary
FYE Aug 2009 2010 2011F 2012F 2013F
Revenue (RM m) 1,529.1 2,079.4 2,009.2 2,298.2 2,427.2
EBITDA (RM m) 286.2 362.3 406.0 440.3 466.8
EBITDA margins (%) 18.7% 17.4% 20.2% 19.2% 19.2%
Pretax profit (RM m) 222.0 306.0 352.4 386.8 413.9
Stock Information Net profit (RM m) 169.1 245.3 276.0 302.9 324.1
EPS (sen) 27.4 39.7 44.6 49.0 52.4
Market cap: RM3,432m/US$1,094m EPS growth (%) 53.7% 45.0% 12.5% 9.8% 7.0%
12-m price range: RM7.24 P/E (x) 20.3 14.0 12.4 11.3 10.6
RM4.60 Gross DPS (sen) 10.9 16.0 18.0 20.0 22.0
3-m avg daily vol: 1.9m Dividend yield (%) 2.0% 2.9% 3.2% 3.6% 4.0%
No. of shrs (m): 618 P/BV (x) 4.2 3.1 2.6 2.2 1.9
Est. free float (%): 55.3 ROE (%) 22.7% 25.6% 23.0% 21.3% 19.5%
Conv. secs (m): None Net cash per share (RM) 0.27 0.48 0.79 1.09 1.45
Major shareholders (%): P/FCFE (x) 62.1 26.3 13.3 13.0 11.4
- Tan Sri Dr. Lim Wee Chai 29.0 EV/EBITDA (x) 11.5 8.7 7.3 6.3 5.5
- Top Glove Holdings 5.2 % change in EPS estimates N/A N/A N/A
- Matthews International 5.2 CIMB/Consensus (x) 1.10 1.13 1.07
Source: Company, CIMB Research, Bloomberg
6.8
1.00
of 23% based on its existing capacity of 33.75bn pieces. Established in 1991, the
0.80
6.3
0.60
group was listed on Bursa Malaysia in 2001. Currently, it has 379 production lines in
5.8
5.3
0.40
18 glove manufacturing factories located in Malaysia, Thailand and China. It also has
4.8 0.20 two latex concentrate plants in Thailand with a combined capacity of 93,200 tonnes
4.3
Dec-09 May-10 Oct-10
0.00
p.a. The company produces a diversified range of high-quality and value-added
Volume 10m (R.H.Scale) Top Glove Corporation gloves for the medical, food & services, high technology and industrial markets.
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Uchi Technologies Bhd RM1.34 @07/12/10
An unknown brew for 2011 Target: RM1.68
Technology - Others
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 122.8 83.1 100.4 110.5 121.5
EBITDA (RM m) 53.5 41.1 46.6 50.9 55.7
EBITDA margins (%) 43.6% 49.4% 46.4% 46.1% 45.9%
Pretax profit (RM m) 60.7 27.7 45.0 49.0 53.8
Net profit (RM m) 58.7 27.0 44.7 48.9 53.7
EPS (sen) 15.8 7.3 12.1 13.2 14.5
EPS growth (%) (24.7%) (53.9%) 66.1% 9.2% 9.8%
Stock Information P/E (x) 8.5 18.5 11.1 10.2 9.3
Core EPS (sen) 15.8 10.1 12.1 13.2 14.5
Market cap: RM503m/US$160m Core EPS growth (%) (24.7%) (36.1%) 19.9% 9.2% 9.8%
12-m price range: RM1.46 Core P/E (x) 8.5 13.3 11.1 10.2 9.3
RM1.17 Gross DPS (sen) 16.7 8.0 13.3 14.1 15.4
3-m avg daily vol: 0.3m Dividend yield (%) 12.5% 6.0% 10.0% 10.5% 11.5%
No. of shrs (m): 376 P/BV (x) 2.9 3.0 2.9 2.8 2.6
Est. free float (%): 26.4 ROE (%) 34.1% 16.2% 26.8% 27.8% 28.8%
Conv. secs (m): None Net cash per share (RM) 0.37 0.34 0.34 0.36 0.38
Major shareholders (%): P/FCFE (x) 7.9 15.3 12.5 11.1 10.0
- Eastbow International 24.6 EV/EBITDA (x) 6.8 9.1 7.9 7.1 6.4
- Lembaga Tabung Haji 10.1 % change in EPS estimates N/A N/A N/A
- EPF 5.6 CIMB/Consensus (x) 1.07 1.01 1.03
Source: Company, CIMB Research, Bloomberg
2.00
makers and scientific instruments. Uchi is the largest producer of fully automated
1.3
1.3
1.50 coffee modules in the world. These products contribute around 80% of its revenue.
1.2
1.2
1.00
0.50
Uchi supplies them to Eugster which supplies the completed coffee machines to
1.1
De c-09 Ma y-10 Oct-10
0.00
Saeco (Italian), Jura (Swiss), Krups (German), AG (German), Bosch (German),
Volume 1m (R.H.S ca le ) Uchi Te chnolog ie s Bhd Siemens (German) and Nestle (Swiss). The remaining 20% of Uchi’s revenue comes
Source: Bloomberg from the biotech division, namely weighing scales and lab products.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
UMW Holdings Bhd RM6.91 @07/12/10
Vehicle for auto exposure Target: RM8.85
Autos
UMWH MK / UMWS.KL Loke Wei Wern +60 (3) 2084 9946 – weiwern.loke@cimb.com
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 12,769.6 10,699.0 12,361.3 12,917.6 13,716.4
EBITDA (RM m) 1,268.2 1,013.5 1,505.5 1,553.2 1,616.6
EBITDA margins (%) 9.9% 9.5% 12.2% 12.0% 11.8%
Pretax profit (RM m) 1,276.7 846.5 1,417.2 1,505.6 1,573.2
Net profit (RM m) 565.8 382.4 652.7 736.6 771.3
EPS (sen) 52.2 34.6 58.3 65.8 68.9
Stock Information EPS growth (%) 16.6% (33.8%) 68.6% 12.8% 4.7%
Market cap: RM7,960m/US$2,538m P/E (x) 13.2 20.0 11.8 10.5 10.0
12-m price range: RM7.01 Gross DPS (sen) 37.3 27.0 39.0 44.0 45.9
RM5.96 Dividend yield (%) 5.4% 3.9% 5.6% 6.4% 6.6%
3-m avg daily vol: 2.3m P/BV (x) 2.1 2.0 1.9 1.7 1.6
No. of shrs (m): 1,152 ROE (%) 17.0% 10.5% 16.6% 17.2% 16.6%
Est. free float (%): 30.0 Net gearing (%) N/A 8.4% 1.2% N/A N/A
Conv. secs (m): None Net cash per share (RM) 0.27 N/A N/A 0.41 0.89
Major shareholders (%): P/FCFE (x) 20.9 8.9 13.0 11.9 11.0
- Permodalan Nasional Bhd 61.0 EV/EBITDA (x) 6.5 9.1 6.1 5.8 5.4
- EPF 10.2 % change in EPS estimates - - -
- Kumpulan Wang Persaraan 5.1 CIMB/Consensus (x) 1.04 1.06 0.97
Source: Company, CIMB Research, Bloomberg
0.40
has the biggest exposure to the sector with a 46% market share through Toyota
6.4
6.2
0.30 (15%) and Perodua (31%). Its other major divisions include the oil & gas (O&G),
0.20
6.0
5.8 0.10
manufacturing and engineering (M&E) as well as the equipment divisions. The auto
5.6
De c-09 Ma y-10 Oct-10
0.00
division remains UMW’s biggest earnings contributor, accounting for close to 80% of
Volume 10m (R.H.S ca le ) UMW Holdings Bhd group revenue.
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Unisem (M) Berhad RM1.96 @07/12/10
All eyes on China Target: RM2.82
Semiconductor
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 1,233.4 1,036.3 1,396.8 1,605.3 1,748.2
EBITDA (RM m) 235.7 245.4 342.7 412.2 455.1
EBITDA margins (%) 19.1% 23.7% 24.5% 25.7% 26.0%
Pretax profit (RM m) 24.0 58.4 197.9 230.3 267.5
Net profit (RM m) 19.8 61.8 178.7 204.0 231.9
EPS (sen) 3.7 9.2 26.5 30.3 34.4
EPS growth (%) (85.5%) 151.1% 189.1% 14.2% 13.7%
P/E (x) 53.7 21.4 7.4 6.5 5.7
Core EPS (sen) 10.0 10.2 26.5 30.3 34.4
Core EPS growth (%) (28.9%) 1.8% 160.5% 14.2% 13.7%
Stock Information
Core P/E (x) 19.6 19.3 7.4 6.5 5.7
Market cap: RM1,321m/US$421m FD core EPS (sen) 10.0 10.2 22.5 25.4 28.7
12-m price range: RM3.48 FD core P/E (x) 19.6 19.3 8.7 7.7 6.8
RM1.15 Gross DPS (sen) 3.0 2.5 8.0 13.3 13.3
3-m avg daily vol: 2.5m Dividend yield (%) 1.5% 1.3% 4.1% 6.8% 6.8%
No. of shrs (m): 674 P/BV (x) 1.4 1.4 1.2 1.1 1.0
Est. free float (%): 35.3 ROE (%) 2.4% 6.9% 17.7% 18.0% 18.4%
Conv. secs (m): 168.5 Net gearing (%) 54.9% 34.4% 29.4% 25.2% 14.7%
Major shareholders (%): P/FCFE (x) (210.7) (17.7) 20.8 15.5 8.3
- John Chia 32.0 EV/EBITDA (x) 6.5 6.8 4.8 4.0 3.4
- LTAT 5.4 % change in EPS estimates N/A N/A N/A
- EPF 3.7 CIMB/Consensus (x) 1.04 1.10 1.14
Source: Company, CIMB Research, Bloomberg
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Wah Seong Corp Bhd RM2.00 @07/12/10
In need of a stronger coating of growth Target: RM2.36
Oil & Gas - Equipment & Svs
• Maintain OUTPERFORM. We maintain our forecasts but raise our target price from
RM2.24 to RM2.36, pegged to a revised target market P/E of 14.5x (13.8x
previously). Wah Seong remains a NEUTRAL. Our top oil & gas pick is
SapuraCrest.
• Gorgon project interrupted. The 3-year, RM551m Chevron Australia’s Gorgon
project, which involves the coating of 850km of pipes, commenced in Apr 10 but
was halted for a few weeks beginning Jun. The project resumed in late Jul but at a
slow pace. Putting the production hiccup behind, management stated that the
project is already back on track and that the company’s 4Q performance should
better reflect the execution of the project. Now in full production, the project takes
up about 70% of the Kuantan facility’s capacity and will contribute for the first full
year in FY11. Management has expressed its interest in other Australian pipe
coating contracts that are yet to be awarded including two by Woodside and Inpex
estimated to be worth some RM1.3bn.
• Engineering unit shows progress. While the pipe coating and corrosion
protection business awaits the award of new contracts, the engineering business
has picked up new jobs worth US$60m, which have helped to boost the company’s
order book value to RM1.3bn. Engineering jobs contribute 30% to the order book.
Pipe coating and corrosion protection remains the company’s main business with a
43% order book contribution.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 2,343.2 1,950.3 1,372.6 1,639.3 1,712.6
EBITDA (RM m) 247.2 452.1 129.5 221.3 273.2
EBITDA margins (%) 10.5% 23.2% 9.4% 13.5% 16.0%
Pretax profit (RM m) 152.9 245.8 67.3 156.3 205.0
Net profit (RM m) 115.6 121.3 51.9 107.4 137.7
EPS (sen) 17.7 17.8 7.6 15.8 20.2
EPS growth (%) 13.6% 0.6% (57.2%) 106.7% 28.2%
Stock Information P/E (x) 11.3 11.2 26.2 12.7 9.9
FD core EPS (sen) 14.1 14.3 6.1 12.7 16.2
Market cap: RM1,448m/US$462m FD core P/E (x) 14.2 14.0 32.6 15.8 12.3
12-m price range: RM2.75 Gross DPS (sen) 6.5 7.4 2.7 5.5 7.1
RM1.97 Dividend yield (%) 3.3% 3.7% 1.3% 2.8% 3.5%
3-m avg daily vol: 0.9m P/BV (x) 3.2 3.2 3.7 3.3 3.1
No. of shrs (m): 724 ROE (%) 31.2% 29.3% 13.0% 27.4% 32.4%
Est. free float (%): 57.9 Net gearing (%) 38.6% N/A N/A N/A N/A
Conv. secs (m): 30.7 Net cash per share (RM) N/A 0.01 0.39 0.40 0.74
Major shareholders (%): P/FCFE (x) 40.2 4.5 4.5 40.9 5.0
- Wah Seong (Malaya) 26.7 EV/EBITDA (x) 7.3 3.6 10.8 6.4 4.5
- Chan Cheu Leong 8.6 % change in EPS estimates - - -
- EPF 6.8 CIMB/Consensus (x) 0.83 1.05 1.18
Source: Company, CIMB Research, Bloomberg
2.4
0.30
presence across Asia. The company’s client base of oil & gas majors and state-run oil
2.2
0.20
& gas companies shows that it can compete internationally in an industry with high
2.0 0.10 entry barriers. In recent years, Wah Seong has made inroads into the engineering
1.8
De c-09 Ma y-10 Oct-10
0.00
business with the fabrication of gas compressors through GSI International. After
Volume 10m (R.H.S ca le ) Wa h S e ong Corp Bhd completing works in Turkmenistan, the company is now eyeing more pipe coating jobs
Source: Bloomberg in Australia.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
WCT Bhd RM3.00 @07/12/10
Moving to higher ground in 2011 Target: RM4.34
Construction
• Top construction pick. WCT’s upbeat view on its outlook in 2011 ties in with our
overall positive stance on the construction sector. Locally, it will be driven by the
implementation of mega jobs and focus projects under the government’s Economic
Transformation Programme (ETP). The group is also optimistic about its prospects
in the Middle East (ex-Dubai) and long-term positive on its positioning in Vietnam.
Order book replenishment potential remains good, with RM2bn targeted for 2011.
We reiterate our OUTPERFORM rating while raising our RNAV-based target price
from RM4.21 to RM4.34 as we apply our revised target market P/E of 14.5x (prev.
13.8x) to its construction net profit component. The main potential re-rating catalyst
is contract awards. WCT is one of our top picks for the construction sector.
• 2010 target for new jobs in the bag; RM2bn in 2011. In 2010, the group clinched
four jobs worth slightly over RM2bn, meeting its target. The outstanding order book
stands at RM3.9bn with a roughly equal split between local and overseas jobs. The
RM1.4bn Qatar government building project which was secured recently is a
significant milestone for the group as it represents the biggest open tender
overseas job awarded to a local contractor. The recently clinched RM486m new
LCCT was another milestone that will boost the group’s recurring income base.
Financial summary
FYE Dec 2008 2009 2010F 2011F 2012F
Revenue (RM m) 3,711.5 4,666.6 3,087.0 3,597.4 3,619.1
EBITDA (RM m) 292.9 359.6 425.2 476.7 494.8
EBITDA margins (%) 7.9% 7.7% 13.8% 13.3% 13.7%
Pretax profit (RM m) 158.4 207.9 284.8 325.2 331.8
Net profit (RM m) 101.3 143.9 151.2 180.8 187.7
EPS (sen) 12.9 18.4 19.3 23.1 23.9
EPS growth (%) (39.7%) 42.0% 5.1% 19.5% 3.8%
P/E (x) 23.2 16.3 15.6 13.0 12.5
Core EPS (sen) 21.9 18.4 19.3 23.1 23.9
Core EPS growth (%) 1.9% (16.0%) 5.1% 19.5% 3.8%
Stock Information
Core P/E (x) 13.7 16.3 15.6 13.0 12.5
Market cap: RM2,359m/US$750m FD core EPS (sen) 20.8 17.5 18.3 22.6 23.8
12-m price range: RM3.27 FD core P/E (x) 14.4 17.2 16.4 13.3 12.6
RM2.48 Gross DPS (sen) 8.8 10.0 10.0 10.0 10.0
3-m avg daily vol: 3.0m Dividend yield (%) 2.9% 3.3% 3.3% 3.3% 3.3%
No. of shrs (m): 786 P/BV (x) 2.6 2.3 2.1 1.8 1.6
Est. free float (%): 51.1 ROE (%) 12.1% 15.0% 14.2% 15.0% 13.8%
Conv. secs (m): 139.9 Net gearing (%) 43.4% 35.2% 30.1% 22.8% 18.7%
Major shareholders (%): P/FCFE (x) (29.1) 22.9 35.3 21.5 32.2
- EPF 20.5 EV/EBITDA (x) 9.9 7.9 6.8 6.0 5.8
- WCT Capital 22.0 % change in EPS estimates N/A N/A N/A
- KWAP 6.4 CIMB/Consensus (x) 1.08 1.02 0.95
Source: Company, CIMB Research, Bloomberg
2.9
0.80
engineering, building & infrastructure construction, property development, property
2.7
0.60
investment and toll highway concession. The group is one of the highly regarded
0.40
2.5
0.20
contractors in the Gulf region. Over the past 28 years, WCT has completed over 300
2.3
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projects worth RM9.5bn. The construction business is the biggest earnings
Volume 10m (R.H.S ca le ) WCT Bhd contributor, accounting more than 60% of earnings, followed by property at 30%.
Source: Bloomberg
Syariah-compliant stock
MALAYSIA
NEUTRAL Maintained
Wellcall Holdings RM1.19 @07/12/10
Overstretched by rubber Target: RM1.28
Ind Goods & Services - Others
• Maintain NEUTRAL. Despite its high dividend yields, Wellcall remains a NEUTRAL
as there are no re-rating catalysts in sight. Although we continue to value the stock
at a 40% discount to Top Glove’s target P/E, our target price rises from RM1.22 to
RM1.28 as we are raising Top Glove’s CY12 target P/E from 13.8x to 14.5x, in line
with the revision of our target market P/E. For exposure to small-cap stocks in the
rubber sector, we prefer glove producers, Latexx and Adventa.
• Raw material price at record high. Rubber prices are at all-time highs. The price
of SMR20 climbed 30% in the past three months to reach above the RM13/kg in
November, even higher than the 2008 peak of RM10.50/kg. As there is a 2-3
months lag before Wellcall is able to pass on the cost rise to its customers, more
margin erosion can be expected for 1QFY9/11. The margin deterioration could
continue if raw material costs continue to trend higher. Our current forecast for the
average SMR20 price is RM10/kg for FY11-12 compared with an average of
RM9.50/kg in FY10.
• Strong demand. Demand remains strong, with an order backlog of 2-3 months for
extrusion hoses and around two months for mandrel. The company is already
operating on two shifts to meet demand. But Wellcall is concerned that if raw
material prices stay high, orders may slow down as customers fear that they could
be caught with high-priced inventory when prices come off eventually.
• Balance sheet is healthy. With RM40m net cash as at end-Sep, the company is
able to pay out most of its earnings as dividends. In FY10, the net dividend payout
ratio was 99%. Wellcall is looking at a major expansion in the long term. Land,
factory and machinery capex could be around RM20m. Funding of the capex is not
a concern in view of its net cash.
Financial summary
FYE Sep 2009 2010 2011F 2012F 2013F
Revenue (RM m) 79.0 96.6 117.6 130.5 144.9
EBITDA (RM m) 16.3 18.6 25.3 28.5 29.7
EBITDA margins (%) 20.6% 19.3% 21.5% 21.8% 20.5%
Pretax profit (RM m) 14.3 16.0 22.0 25.2 26.4
Stock Information Net profit (RM m) 13.2 14.6 16.7 19.2 20.1
EPS (sen) 10.3 11.1 12.7 14.5 15.2
Market cap: RM157m/US$50m EPS growth (%) (22.8%) 7.4% 14.5% 14.5% 4.8%
12-m price range: RM1.46 P/E (x) 11.5 10.7 9.4 8.2 7.8
RM1.13 Gross DPS (sen) 14.7 14.7 15.2 17.4 18.3
3-m avg daily vol: 0.2m Dividend yield (%) 12.3% 12.3% 12.8% 14.6% 15.4%
No. of shrs (m): 132 P/BV (x) 1.9 2.0 2.0 1.9 1.9
Est. free float (%): 30.0 ROE (%) 17.1% 18.5% 21.4% 24.0% 24.5%
Conv. secs (m): None Net cash per share (RM) 0.33 0.30 0.19 0.18 0.16
Major shareholders (%): P/FCFE (x) 6.7 10.1 (560.1) 10.1 9.6
- Maximum Perspective S/B 11.3 EV/EBITDA (x) 6.8 6.3 5.2 4.7 4.6
- PTB Ventures Sdn. Bhd. 10.9 % change in EPS estimates - - -
- Chew Chee Chek 9.6 CIMB/Consensus (x) 1.00 1.04 1.01
Source: Company, CIMB Research, Bloomberg
1.3
1.00 segment as they are made to order. Exports to markets like Asia, the Middle East,
1.2
0.80
0.60
Europe and the US make up more than 90% of its sales. Asia remains its largest
1.1
0.40
0.20
export market, with the Middle East coming in second. Wellcall has more than 130
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De c-09 Ma y-10 Oct-10
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customers in over 50 countries. Its customers are mainly involved in the distribution of
Volume 1m (R.H.S ca le ) We llca ll Holdings Bhd rubber hoses to OEM producers. Its dividend yields are among the highest in our
Source: Bloomberg stock coverage.
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
Xingquan International RM1.53 @07/12/10
Full of sole Target: RM3.04
Retail
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 434.2 609.3 762.5 880.0 1,002.9
EBITDA (RM m) 119.1 136.5 186.8 201.8 218.5
EBITDA margins (%) 27.4% 22.4% 24.5% 22.9% 21.8%
Pretax profit (RM m) 110.8 130.2 183.9 198.0 215.9
Net profit (RM m) 92.2 105.2 137.7 148.5 161.9
EPS (sen) 42.9 34.2 44.8 48.3 52.7
Stock Information EPS growth (%) 38.3% (20.1%) 30.9% 7.8% 9.1%
Market cap: RM470m/US$150m P/E (x) 3.6 4.5 3.4 3.2 2.9
12-m price range: RM1.90 Gross DPS (sen) 0.0 5.0 6.7 7.2 7.9
RM1.06 Dividend yield (%) 0.0% 3.3% 4.4% 4.7% 5.2%
3-m avg daily vol: 0.3m P/BV (x) 2.7 1.3 1.0 0.8 0.6
No. of shrs (m): 307 ROE (%) 84.0% 44.5% 33.6% 27.9% 24.4%
Est. free float (%): 31.0 Net cash per share (RM) 0.34 0.81 0.65 0.88 1.16
Conv. secs (m): None P/FCFE (x) 3.3 7.1 (15.4) 5.0 4.3
Major shareholders (%): EV/EBITDA (x) 2.2 1.6 1.5 1.0 0.5
- Tai Zhen Xiang Hldgs 58.4 % change in EPS estimates - - -
- Koon Yew Yin 15.0 CIMB/Consensus (x) 0.51 0.47 0.47
Others 0 (1) 0 0 0
3.0
Cash flow from investing (5) (57) (146) (49) (49)
Debt raised/(repaid) 8 15 0 0 0 2.5
Equity raised/(repaid) 0 0 0 0 0
2.0
Dividends paid (70) (7) (21) (22) (24) Jul-09 Nov-09 Mar-10 Jul-10 Nov-10
Cash interest & others 24 133 3 2 3
Cash flow from financing (38) 140 (18) (20) (21)
Change in cash 56 192 (51) 73 84
Change in net cash/(debt) 48 177 (51) 73 84
Ending net cash/(debt) 73 250 199 272 356
Source: Company, CIMB Research, Bloomberg
Syariah-compliant stock
MALAYSIA
OUTPERFORM Maintained
YTL Power International RM2.44 @07/12/10
All eyes on Yes Target: RM2.97
IPP
YTLP MK / YTLP.KL Ivy Ng Lee Fang CFA +60(3) 2084 9697 – ivy.ng@cimb.com
Financial summary
FYE Jun 2009 2010 2011F 2012F 2013F
Revenue (RM m) 6,093.4 13,442.9 13,240.1 13,430.8 13,576.6
EBITDA (RM m) 2,482.7 2,875.5 2,989.9 3,015.3 3,115.9
EBITDA margins (%) 40.7% 21.4% 22.6% 22.5% 23.0%
Pretax profit (RM m) 1,386.9 1,694.0 1,749.2 1,837.3 1,924.6
Net profit (RM m) 646.6 1,212.1 1,251.5 1,314.5 1,377.0
EPS (sen) 10.9 16.7 17.3 18.1 19.0
EPS growth (%) (45.3%) 52.9% 3.2% 5.0% 4.8%
P/E (x) 22.3 14.6 14.1 13.5 12.8
Core EPS (sen) 18.4 16.7 17.3 18.1 19.0
Core EPS growth (%) (7.8%) (9.2%) 3.2% 5.0% 4.8%
Core P/E (x) 13.2 14.6 14.1 13.5 12.8
Stock Information FD core EPS (sen) 14.1 15.4 15.8 16.6 17.4
Market cap: RM17,729m/US$5,652m FD core P/E (x) 17.4 15.9 15.4 14.7 14.0
12-m price range: RM2.60 Gross DPS (sen) 17.5 17.5 17.5 17.5 17.5
RM2.14 Dividend yield (%) 7.2% 7.2% 7.2% 7.2% 7.2%
3-m avg daily vol: 5.9m P/BV (x) 2.4 2.4 2.4 2.3 2.2
No. of shrs (m): 7,266 ROE (%) 10.4% 18.1% 16.9% 17.3% 17.6%
Est. free float (%): 20.0 Net gearing (%) 278.0% 187.7% 186.7% 184.9% 181.1%
Conv. secs (m): 1,202 P/FCFE (x) (5.2) (9.7) (22.0) 320.2 87.5
Major shareholders (%): EV/EBITDA (x) 12.2 10.6 10.3 10.2 9.9
- YTL Corporation 52.0 % change in EPS estimates - - -
- Employees Provident Fund 10.5 CIMB/Consensus (x) 1.04 1.02 1.04
2.6 2.50
years, the group has evolved from just a local power play with two power generating
2.5
2.4
2.00 assets into a global multi-utility group. YTL Power currently owns power plant assets
2.3
1.50
1.00
in Malaysia, Indonesia and Singapore as well. It has exposure to water concession
2.2
2.1 0.50 assets in the UK through Wessex Water and a 33.5% stake in Electranet, which owns
2.0
De c-09 Ma y-10 Oct-10
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and operates a power transmission network in Australia. The group recently launched
Volume 10m (R.H.S ca le ) YTL P owe r Inte rna tiona l its presence within the telco arena with the rollout of its WiMAX network, Yes. By end-
Source: Bloomberg 2011, it will emerge as a quad play with the offering of hybrid TV as well.
Automobiles and Parts 3 14,274 1.9% 1.9 11.5 9.8 8.7 17.1 14.1 < 4.5 4.7 1.7 1.5 15.5 16.0 4.5
Av iation 2 14,153 1.9% 1.9 1.4 9.7 4.8 93.7 114.0 < 0.0 0.0 1.8 1.5 17.2 27.8 4.2
Conglomerates 1 52,523 6.9% 6.9 18.0 16.3 14.6 10.0 12.1 < 4.1 4.6 2.4 2.2 13.9 14.4 9.0
Construction and Materials 8 29,003 3.8% 3.8 25.6 20.7 15.7 26.8 31.9 < 3.0 3.1 3.0 2.9 15.2 16.7 14.4
Consumer 11 39,109 5.2% 5.2 18.9 18.2 17.5 5.2 4.3 < 5.4 5.5 13.6 12.3 71.0 66.0 11.5
Financial Serv ices 10 176,085 23.2% 23.2 14.5 12.4 11.0 16.6 13.6 < 5.6 6.4 2.7 2.4 20.1 20.4 14.3
Forestry and Paper 1 163 0.0% 0.0 5.3 4.1 3.2 31.7 27.1 < 6.8 8.7 0.4 0.4 10.6 12.3 0.7
Industrial Goods and Serv ices 9 9,357 1.2% 1.2 11.9 10.2 8.7 17.0 16.8 < 3.9 4.7 2.7 2.1 25.5 23.9 5.0
Media 3 6,331 0.8% 0.8 13.6 12.4 10.8 9.9 14.5 < 5.3 5.5 3.4 2.8 25.1 24.1 5.6
Oil and Gas 1 11,623 1.5% 1.5 13.7 12.2 11.1 11.6 10.4 < 7.3 7.3 1.8 1.7 14.3 14.3 6.3
Oil Equipment and Serv ices 5 11,911 1.6% 1.6 20.9 16.4 14.6 37.0 12.7 < 2.4 2.7 5.9 5.6 39.7 42.3 9.5
Plantations 4 70,842 9.3% 9.3 21.4 18.4 16.8 16.5 9.5 < 3.7 4.1 3.3 3.0 17.1 16.8 10.7
Property 4 11,681 1.5% 1.5 22.2 18.8 17.1 17.9 10.9 < 3.4 3.6 1.5 1.4 8.8 9.1 12.0
Technology 5 5,520 0.7% 0.7 11.9 10.7 9.0 9.5 21.0 < 6.2 7.1 2.4 2.2 20.5 22.1 5.8
Telecommunications 4 111,120 14.7% 14.7 16.6 18.0 15.5 3.8 12.1 < 6.4 7.1 5.5 5.6 36.5 42.0 6.9
Serv ices 1 877 0.1% 0.1 8.5 7.4 6.2 14.7 18.2 < 6.8 8.0 2.2 1.7 26.4 24.2 2.4
Shipping 2 42,028 5.5% 5.5 29.8 24.6 21.6 20.4 15.2 < 5.3 5.6 1.7 1.6 6.9 7.9 11.9
Transport Infrastructure 3 31,437 4.1% 4.1 17.5 14.3 13.7 23.7 2.8 < 5.7 5.4 3.4 3.4 24.7 26.2 8.9
Trav el and Leisure 4 65,296 8.6% 8.6 15.8 13.8 12.2 15.2 13.0 < 1.7 1.8 3.0 2.6 19.4 18.8 5.3
Utilities 3 55,572 7.3% 7.3 13.9 13.5 12.6 3.7 8.2 < 4.2 4.3 1.6 1.5 11.8 12.1 6.8
Overall * 84 758,028 100.0% 100.0 16.7 15.3 13.7 10.2 12.7 < 4.9 5.1 3.5 3.3 22.5 23.4 8.4
KLCI ** 24 647,599 16.6 15.5 13.9 8.1 12.2 < 5.1 5.2 3.4 3.2 22.1 23.3 8.2
Notes:
1) Dividend yields are computed on gross basis
2) * Based on CIMB's coverage
3) ** Based on index components in CIMB's coverage
Source: CIMB estimates
Financial Services
Affin Holdings Bhd O AHB MK 3.20 Dec 09 474 546 598 31.7 36.6 40.0 10.1 8.8 8.0 0.9 0.8 3.8 cash 4,783 1,100 0.5
Alliance Financial Group U AFG MK 3.08 Mar 10 301 417 467 19.5 26.9 30.2 15.8 11.4 10.2 1.6 0.6 3.8 cash 4,768 3,099 1.6
AMMB Holdings Bhd O AMM MK 6.26 Mar 10 1,009 1,403 1,770 33.4 46.6 58.7 18.7 13.4 10.7 2.0 0.6 3.5 cash 18,869 11,321 3.8
Bursa Malay sia Bhd N BURSA MK 7.96 Dec 09 118 152 167 22.6 29.0 32.0 35.3 27.4 24.9 4.9 1.9 4.4 cash 4,230 2,538 0.9
EON Capital Bhd O EON MK 6.96 Dec 08 480 531 590 69.2 76.6 85.1 10.1 9.1 8.2 1.2 0.9 3.9 cash 4,825 2,509 0.2
Hong Leong Bank Bhd U HLBK MK 9.40 Jun 09 957 1,046 1,121 60.6 66.2 70.9 15.5 14.2 13.3 2.5 1.9 2.6 cash 14,853 4,010 0.3
Kurnia Asia Bhd U KUAB MK 0.35 Dec 09 32 36 37 2.2 2.4 2.5 16.2 14.7 14.1 1.6 2.2 0.0 cash 525 197 0.8
Malay an Banking Bhd O MAY MK 8.41 Jun 10 3,818 4,533 5,084 53.8 63.9 71.7 15.6 13.2 11.7 2.1 1.0 7.1 cash 59,526 30,358 9.0
Public Bank Bhd O PBK MK 12.80 Dec 09 3,027 3,525 4,150 85.1 99.8 117.5 15.0 12.8 10.9 3.5 0.9 5.7 cash 45,209 33,906 1.7
RHB Capital Bhd O RHBC MK 8.59 Dec 09 1,455 1,701 1,956 67.6 79.0 90.9 12.7 10.9 9.5 1.9 0.8 3.7 cash 18,498 3,237 2.7
Forestry and Paper
Eksons Corporation Bhd O EKSON MK 1.00 Mar 10 17 35 42 10.6 21.3 25.6 9.4 4.7 3.9 0.5 0.2 5.9 cash 163 49 0.1
Industrial Goods and Services
Adv enta Bhd O ADV MK 2.13 Oct 09 34 43 57 22.3 28.3 37.2 9.6 7.5 5.7 1.3 0.3 2.8 35.7 325 162 0.2
Ann Joo Resources TB AJR MK 2.94 Dec 09 132 158 225 16.8 20.1 28.7 17.5 14.6 10.3 1.6 0.6 5.8 81.7 1,537 581 0.4
Daibochi Plastic & Packaging Bhd O DPP MK 2.45 Dec 09 18 25 29 24.3 33.3 38.6 10.1 7.4 6.3 1.3 0.4 9.3 3.4 186 93 0.1
Hartalega Holdings O HART MK 5.39 Mar 10 143 185 216 40.0 50.8 59.3 13.5 10.6 9.1 5.5 0.6 3.2 cash 1,959 738 0.2
Kossan Rubber Industries Bhd O KRI MK 3.34 Dec 09 119 145 170 37.1 45.3 53.3 9.0 7.4 6.3 2.3 0.5 3.0 26.8 1,068 388 0.5
Latex x Partners O LTX MK 2.67 Dec 09 81 96 104 29.6 34.8 37.9 9.0 7.7 7.0 2.4 0.7 4.1 12.5 584 377 1.2
Tomy pak Holdings O TOMY MK 1.00 Dec 09 16 25 27 14.5 23.0 25.3 6.9 4.3 4.0 1.2 0.2 8.5 8.1 109 43 0.3
Top Glov e Corporation O TOPG MK 5.55 Aug 10 245 276 303 39.7 44.6 49.0 14.0 12.4 11.3 3.1 1.3 3.2 cash 3,432 1,899 1.1
Wellcall Holdings Bhd N WELL MK 1.19 Sep 10 15 17 19 11.1 12.7 14.5 10.7 9.4 8.2 2.0 0.7 12.8 cash 157 47 0.2
Media
Media Chinese International Ltd O MCIL MK 0.88 Mar 10 134 151 167 7.8 9.0 9.9 11.3 9.8 8.9 1.2 0.9 5.7 cash 1,482 741 0.6
Media Prima Bhd N MPR MK 2.34 Dec 09 158 182 207 14.7 16.9 19.2 15.9 13.9 12.2 6.0 1.1 4.0 15.9 2,345 917 1.2
Star Publications Bhd O STAR MK 3.39 Dec 09 184 193 230 25.0 26.2 31.2 13.6 12.9 10.9 2.3 1.2 6.2 cash 2,504 1,905 0.6
Oil and Gas
Petronas Dagangan Bhd O PETD MK 11.70 Mar 10 753 884 972 75.8 89.0 97.9 15.4 13.2 12.0 1.9 1.1 7.3 cash 11,623 2,811 0.3
Oil Equipment and Services
Dialog Group Bhd U DLG MK 1.60 Jun 10 116 131 150 5.9 6.6 7.6 27.3 24.3 21.1 5.2 2.0 2.5 cash 3,181 1,866 7.8
Kencana Petroleum Bhd O KEPB MK 2.01 Jul 10 136 213 271 10.1 12.9 16.3 19.9 15.6 12.3 10.7 0.7 1.2 3.8 3,335 1,777 9.3
Petra Perdana TB PETR MK 0.77 Dec 09 -40 32 42 -7.9 5.2 7.2 n.m. 14.7 10.6 0.4 n.m. 2.6 25.1 347 211 4.1
SapuraCrest Petroleum O SCRES MK 2.82 Jan 10 170 213 272 13.4 16.8 21.4 21.1 16.8 13.2 4.2 0.8 2.8 19.4 3,600 1,013 1.9
Wah Seong Corp Bhd N WSC MK 2.00 Dec 09 52 107 138 6.1 12.7 16.2 32.6 15.8 12.3 3.7 0.5 2.8 cash 1,448 763 0.7
[ continued on the following page… ]
Plantations
Hap Seng Plantations Holdings TB HAPL MK 3.15 Dec 09 163 187 187 20.4 23.4 23.3 15.4 13.5 13.5 1.5 2.2 5.9 0.0 2,520 861 1.7
IOI Corporation Bhd N IOI MK 5.78 Jun 10 2,036 2,091 2,346 24.0 29.4 34.3 24.1 19.7 16.8 3.5 1.2 3.5 8.0 38,698 22,739 7.6
Genting Plantations Bhd N GENP MK 8.68 Dec 09 326 377 397 43.4 49.9 52.5 20.0 17.4 16.5 2.3 2.0 1.0 cash 6,587 2,135 0.7
Kuala Lumpur Kepong Bhd TB KLK MK 21.58 Sep 10 1,012 1,143 1,265 94.8 107.1 118.5 22.8 20.2 18.2 3.8 1.9 4.0 6.8 23,037 9,745 0.8
Property
Eastern & Oriental Bhd O EAST MK 1.14 Mar 10 71 45 70 6.4 5.7 8.0 17.9 20.0 14.3 0.8 1.5 3.3 36.2 940 631 2.8
KLCC Property Holdings Bhd U KLCC MK 3.53 Mar 10 897 259 282 19.1 20.4 22.2 18.5 17.3 15.9 0.6 2.3 4.2 16.2 3,297 1,563 0.7
SP Setia Bhd O SPSB MK 5.24 Oct 10 252 283 364 21.1 27.9 35.8 24.8 18.8 14.6 2.4 1.0 4.5 26.5 5,674 2,930 2.1
Sunw ay City O SCITY MK 4.50 Dec 09 398 202 232 27.7 34.2 39.0 16.3 13.1 11.5 0.9 0.9 2.2 1.9 2,115 741 0.7
Services
Masterskill Education Group O MASEG MK 2.14 Dec 09 104 119 141 25.3 29.0 34.3 8.5 7.4 6.2 2.2 0.5 6.8 cash 877 359 2.6
Shipping
Malay sian Bulk Carriers Bhd U MBC MK 2.97 Dec 09 213 214 318 21.3 21.4 31.8 14.0 13.9 9.3 1.6 0.6 5.5 cash 2,970 921 0.4
MISC Bhd U MISC MK 8.75 Mar 10 682 1,331 1,603 23.3 29.8 35.9 37.5 29.4 24.4 1.7 1.6 5.3 20.5 39,058 6,640 1.7
Technology
JCY International Bhd U JCYH MK 0.80 Sep 10 176 169 225 9.3 8.3 11.0 8.6 9.7 7.3 1.9 1.0 5.2 24.5 1,636 393 6.3
JobStreet Corp Bhd O JOBS MK 2.88 Dec 09 38 46 52 11.9 14.8 16.5 24.1 19.5 17.4 6.2 1.4 3.3 cash 916 142 0.1
Malay sian Pacific Industries Bhd O MPI MK 5.45 Jun 10 105 94 123 54.0 48.3 63.3 10.1 11.3 8.6 1.4 1.2 6.1 9.1 1,144 240 0.1
Uchi Technologies Bhd O UCHI MK 1.34 Dec 09 45 49 54 12.1 13.2 14.5 11.1 10.2 9.3 2.9 1.2 10.5 cash 503 133 0.5
Unisem (M) Berhad O UNI MK 1.96 Dec 09 179 204 232 22.5 25.4 28.7 8.7 7.7 6.8 1.2 0.7 6.8 29.4 1,321 466 1.4
Telecommunications
Ax iata Group Berhad O AXIATA MK 4.67 Dec 09 2,745 3,075 3,304 32.5 36.4 39.1 14.4 12.8 11.9 2.0 1.5 2.4 26.3 39,439 15,046 18.1
DiGi.com Bhd N DIGI MK 24.80 Dec 09 1,159 1,299 1,451 149.1 167.1 186.6 16.6 14.8 13.3 16.9 1.4 6.7 60.9 19,282 9,151 0.3
Max is Berhad N MAXIS MK 5.36 Dec 09 2,320 2,545 2,779 30.9 33.9 37.0 17.3 15.8 14.5 4.7 1.8 10.0 57.0 40,200 12,060 4.2
Telekom Malay sia Bhd TB T MK 3.41 Dec 09 970 613 717 16.2 7.3 10.1 21.0 46.5 33.8 1.7 n.m. 7.6 37.0 12,199 4,244 6.5
Transport Infrastructure
Bintulu Port Holdings Bhd N BPH MK 6.60 Dec 09 143 150 157 35.8 37.5 39.3 18.5 17.6 16.8 3.2 3.8 8.3 cash 2,640 571 0.0
Malay sia Airports Holdings Bhd O MAHB MK 6.27 Dec 09 375 414 390 34.1 37.7 35.4 18.4 16.6 17.7 2.0 9.6 4.0 35.6 6,897 2,069 0.5
PLUS Ex pressw ay s Bhd O PLUS MK 4.38 Dec 09 1,282 1,669 1,763 25.6 33.4 35.3 17.1 13.1 12.4 3.9 1.0 5.9 57.5 21,900 10,359 5.2
Note:
1) Dividend yield is gross.
O = Outperform, N=Neutral, U = Underperform, TB = Trading Buy, TS = Trading Sell and NR = Not Rated
Source: CIMB estimates
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Sime Darby CW, Gamuda, Gamuda CW, IJM Corp, IJM Corp CW, MRCB, MRCB CW, Mudajaya, WCT, WCT CW, Malayan Banking, Maybank CW, Public
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