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

RHB Research Institute

RHB Equity 360°

8 March 2010 (Property, Genting Singapore, Magna Prima; Technical: Proton, Affin)

Top Story : Property – Expect imminent re-rating on Malaysian REITs Overweight

Sector Note
- We like M-REITs due to their natural defensive qualities and solid property market fundamentals. These
make them excellent asset class in the current volatile market environment. On top of that, M-REITs is
currently trading at attractive FY10 spread 10-year MGS, 10-year Cagamas bond and even its regional
peer, S-REITs.
- The emergence of a new sector leader i.e. Suncity REIT in the M–REITS arena will help to inject
excitement and interest into the sector. The REIT is expected to have an asset size of more than RM3.0bn.
Given its size, it is expected to be the bellwether for the M–REITs industry and help to inject interest and
excitement.
- We expect REIT players to renew their focus on portfolio expansion and growth in distributable income.
Further acquisitions are likely in the coming year. We advocate that investors with lower risk appetite and
longer-term investment horizon should position themselves in the M-REITs given their high yield and
defensive nature. In addition, as the industry grows, liquidity will improve and we expect a sustainable
narrowing of yield gap with S-REITs. Our current top pick for the sector is Axis REIT.

Economic Highlights

Trade : Exports surged in January due partly to a lower base effect

Economic Highlights (published 5 Mar 2010)
- Malaysia’s exports grew strongly by 37.0% yoy in January, after a gain of 18.7% in December. This was
the third month of increase in four months and the strongest in 11 years, due partly to a lower base effect
and partly to a recovery in global demand.
- Stronger growth was underpinned by a strong pick-up in the exports of electronic & electrical (E&E)
products and non-E&E manufactured goods as well as commodity products during the month.
- Going forward, we expect the country’s real exports to bounce back and expand by 8.5% in 2010, from -
16.6% in 2009. This is in line with the recovery in the global economy, which is gaining momentum, though
the pace is likely to be slow and uneven.

Corporate Highlights

Genting Singapore : Thrills and spills await Outperform

News Update
- Resorts World Sentosa (RWS) will open its Universal Studios Singapore (USS) theme park to the public at
8:28am on 18 Mar. Ticket sales will begin at 9 am on 10 Mar and same day tickets are not available. There
will be some tickets set aside for hotel guests on a first-come-first-served basis during this soft opening.
- This will be a progressive soft opening for USS, not unlike the casino, which means that limited tickets will
be sold and that it is possible that certain attractions may become temporarily unavailable as it continues its
technical and creative adjustments during this period. To compensate for this, ticket prices will be partially
rebated by shopping and dining vouchers valid for use at USS. There was no mention on how long this
“preview/soft opening” phase will last.
- Nevertheless, we understand that on the first day USS only intends to sell 3,000 tickets, vs. its full capacity
of 30,000, but would gradually ramp up the number of tickets sold over the next 2-3 months, with the jump
between each stage of capacity to be relatively large (e.g. from 3,000 to 10,000 tickets).
- We have trimmed our FY10 forecast by 3.1% to push our projected contribution from USS back by 1.5
months to beg-May (from beg-Mar). Although USS opens in mid-Mar, we are discounting the first six weeks
of operations to be conservative, given the gradual ramping up of ticket sales and ongoing technical
adjustments.
- We continue to highlight a potential for earnings upgrade in our forecasts via: 1) higher revenue per patron
– due to management’s casino target market of “above average” patrons versus our assumption which is
 based on a VIP:mass split of 50:50; and 2) longer-than-expected casino monopoly in Singapore should
Marina Bay Sands open later than Apr-10. No change to S$1.35 fair value, based on blended average of
EV/EBITDA (12x FY11 based on regional average) and DCF methodologies.

Magna Prima : The gem under the radar screen Not Rated
Visit Note
- This year would be a turnaround year for Magna Prima, the owner of prime Jalan Ampang land which
currently houses the Lai Meng Primary and Kindergarten schools but will be vacated once the company
builds the new school premises in Bukit Jalil. The company is looking to more than double its earnings in
2010, supported by five new property launches and RM138m unbilled sales (or 0.5x of consensus FY10
revenue forecast).
- Based on consensus estimates, the company is currently trading at undemanding 7.7x FY10 EPS, backed
by a 3-year EPS CAGR of 66.7%.
- Despite its strong potential earnings growth in 2010-2011, we are applying a 30% discount to our estimated
RNAV of RM1.92 given its relatively small market capitalisation and low trading volume. We thus derive a
fair value of RM1.34 for Magna Prima, which implies some 45% upside from current levels.

Technical Highlights

Daily Trading Strategy : Critical medium-term bullish chart breakout underway!

- Last Friday’s bullish rally ended near the 1,300 psychological barrier and refreshed the chance for a critical
bullish chart breakout today, i.e. removal of tough medium-term resistance zone from 1,250-1,300 region.
- Upon a successful breakout, FBM KLCI’s medium-term chart outlook will turn bullish once again.
- If it materialises, this would double the impact from the positive crossover of the 10-day SMA to above the
40-day SMA on Friday.
- Therefore further extension of the current short-term upswing towards 1,354.79 and the ultimate target of
1,390 tough technical resistance is possible.
- Coupled with encouraging jobs data reported in the US, prompting a triple-digit rally on US DJIA last
Friday, the FBM KLCI is expected to open above the 1,300 psychological level today
- All said, the index must still remove the Jan high of 1,308.52 today and acquire a firm daily trading volume
of between 800m and 1.0bn shares to confirm this critical chart breakout.
- This is to prevent a slip back into the stubborn medium-term resistance zone of 1,250-1,300.

Daily Technical Watch: Proton Holdings – Poised to recross the RM4.26 resistance level soon …
- 10-day SMA: RM4.06
- 40-day SMA: RM4.008
- Support: IS = RM3.80 S1 = RM3.40 S2 = RM3.00
- Resistance: IR = RM4.26 R1 = RM5.00

Weekly Trading Idea : Affin – Bargain Buy near RM2.70 for a rally towards RM3.08… Bargain Buy
- Strategy: Bargain Buy nearer to RM2.70 for a further rally ahead.
- Target: IR = RM3.08 R1 = RM3.45 R2 = RM3.71
- Support: IS = RM2.70 S1 = RM2.40 S2 = RM2.14
- Exit: Stop loss should be placed at below the 10-day SMA of RM2.69.

Commodities & Currencies : Positive on commodities but mixed outlook on the US$ …
- Light Sweet Crude Oil futures: Surge towards the US$87-US$100 resistance zone in the medium term.
- Crude Palm Oil futures (CPO): If it removes the Jan high of RM2,726, it will retest RM2,760 tough
resistance level and the RM2,800.
- Ringgit (RM)/US$: Ringgit is likely to see stronger strength against the US$ this week.
- Japanese Yen (JPY)/US$: The DRL will support the yen from further weakening against the US$.
- Euro Dollar (EUR)/US$: Significantly strong support at 0.73 currently capping EUR from further weakening.
- US Dollar Index (DXY): Repeating to call for a likely retreat this week.
 Bulletin Board

Co/Sector News Impact Recom

Plantations According to Sarawak Land Development
Minister, Sarawak is opening up large tracts of
land for oil palm cultivation and has emerged as
a “hotspot’’ for plantation investors, as
established plantation companies from the
peninsula are pouring into Sarawak to seek both
state and native customary rights (NCR) land in a
move to expand their estates. (Star)
TNB According to TNB, Jan electricity demand jumped
13.2% yoy with industrial/commercial/domestic
segments up 17.8%/9%/10.1% yoy respectively.
(TNB)
UMW UMW plans to spend RM170m in 2010 to
upgrade its operation in anticipation of increase
in vehicle sales this year. The amount will be
spent on improvement of sales, service, logistics
and manufacturing facilities of UMW. UMW has
already seen sales of close to 13k new vehicles
in the first two months of 2010 – 26% more than
the sales in January-February period in 2009.
(Malaysian Reserve)
Positive, although we believe the reason for the OW
length of time taken processing of new land
applications in Sarawak lies not only with the red
tape but also with the problems with the local
natives who currently occupy the land. Recall
IOIC has pulled out of proposed land acquisition
deals in Sarawak before, while Sime Darby’s
purported 60,000ha of land in Sarawak has yet to
be formalised and seems to be taking some time
to kick off. We would not put too much hope in
more Sarawak land acquisitions coming through
for the plantation companies under our coverage,
especially since more companies seem to prefer
expanding in Indonesia, of late.
Positive. While partly a reflection of the low base OP, FV =
effect, nevertheless, Jan’s strong growth helps RM9.50
reaffirm our view that TNB is a key beneficiary of
an improving economy. YTD (FY08/10),
electricity unit sales rose 5.7% yoy, as compared
to our FY10 demand growth assumption of
+3.8%. Our sensitivity analysis suggests every
1%-pt change in our demand growth assumption
would impact our forecast by 2.5-3%.
We are positive on this development as it is in MP, FV =
line with our and management’s expectation that RM6.71
Toyota’s sales will benefit from the economic
recovery where preference towards premium
products will start to improve. Note that we
expect FY10-11 Toyota unit sales to increase by
9.4% and 1.8% yoy respectively.

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Bursa Malaysia Final dividend of 9 sen single tier 31-mar-10 15-Apr-10

Going “ex” on 9 Mar

DXN Holdings Third interim dividend of 1 sen less 25% tax 9-Mar-10 19-Mar-10

...For more details, see individual reports attached

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