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

RHB Research Institute

RHB Equity 360°

7 April 2010 (MCIL, Pos, Petronas Gas; Technical: Affin, L&G)

Top Story : Media Chinese – Still An Outperform Outperform

Company Update
- MCIL has enjoyed a strong start to the year with its share price up 59.3% YTD. This has outperformed both
the FBM KLCI (+5.4% YTD) and FBM100 (+6.2% YTD). We believe the strong share price performance
has been due to factors such as improving economic conditions, which would generally benefit adex, and
above-consensus quarterly results.
- We also note that ad spending for the Malaysian operations has got off on a strong note. According to
Nielsen Media Research, YTD gross adex for MCIL’s Chinese dailies, namely, Sin Chew, Nanyang, China
Press and Guang Ming, grew 20.6% yoy.
- Recall MCIL’s 3QFY10 EBIT margin for the publishing and printing division expanded by 7.0%-pts qoq.
This was due to stronger ad revenue during the quarter, which would flow straight to operating profit, and
on-going cost-control measures. With two major cost items which are newsprint and staff cost are kept
under control, we think MCIL is poised to benefit from the upswing in ad spend ahead.
- Given the improved liquidity on the stock, we are raising our target CY10 PER to 13x (11x previously),
which is at a 20% discount to our target PER for Star (of 16x) on account of its smaller market
capitalisation.
- Our indicative fair value has been raised to RM1.09 (from RM0.92) and our Outperform call on the stock
remains unchanged.

Corporate Highlights

Pos Malaysia : Higher postal tariffs from 1 Jul 10 Not Rated

News Update
- Pos Malaysia (POSM) announced that it will raise domestic postage stamps for standard mail below 50
gram, non-standard mail below 100 gram, periodicals, and PosDokumen w.e.f. 1 Jul 10.
- POSM will also raise employees’ salaries in order to boost its employees’ productivity that is in turn crucial
in helping POSM to kick start its transformation plan.
- We believe the postal tariff adjustment will at least help address POSM’s concerns on declining mail
volumes and rising transportation costs. However, we note that POSM will require an automatic pricing
mechanism for its postal tariffs in order to ensure its longer term survival.
- Given its strong earnings growth in FY12/11, we believe POSM should be valued at par with Singapore
Post’s current PER, hence, we value POSM at RM3.66 based on 13.6x FY12/10 PER.

Petronas Gas : Moving towards gas transmission business Market Perform (upgraded)
Briefing Note
- We believe the key driver for the revised GPTA is to tap into the growth potential of the gas transportation
business arising from higher demand for processed gas transmission (vs. unprocessed gas from offshore
Peninsular Malaysia) over the long term.
- We understand that the different transportation tariffs for the four zones (i.e. Zone 1-East, Zone 2-Southern,
Zone 3-Central and Zone 4-North) is mainly due to the distance from gas intake points (i.e. Kertih and
Pauh) and gas volumes as well as the investment in the gas pipelines.
- We have highlighted that the lower RC and FC is sufficiently compensated by the new CRC as well as zero
gas cost for internal consumption. Nevertheless, we have increased FY11-12 revenue contributions from
the new Capacity Reservation Charge by 15-18% after factoring in the new gas distribution assumptions.
- We have revised up our FY11-12 earnings estimates by 12.4% and 12.3% respectively after factoring in
the above changes. Accordingly, we have raised our fair value to RM10.51/share (vs. RM9.72/share
previously).
- Hence, given the potential upside of 6.3% to our new fair value estimate, we are upgrading the stock to
Market Perform (from Underperform previously).
 Technical Highlights

Daily Trading Strategy : Further Upside Potential

- The impressive eleventh day rally on the FBM KLCI, its longest winning streak since 1994, on the back of
steady rotational plays has yet to show any signs of exhaustion, technically.
- Although the stochastic oscillators have reached the “extremely overbought” region, upside remains
possible with the recent improvement on the daily turnover that has excited the trading instinct of the retail
and institutional investors.
- For that, we continue to expect the FBM KLCI to expand the current run-up towards the closure of the
technical gap at 1,344.46 – 1,354.79 in the near term.
- In our view, trading interests on lower liners and the laggard blue chips are expected to attract more
activities in sessions ahead.
- Beyond the technical gap, our next resistance for the FBM KLCI is seen at 1,390.

Daily Technical Watch: Affin – Removal of RM3.08 will mean further upside ahead
- 10-day SMA: RM2.917
- 40-day SMA: RM2.768
- Support: IS = RM2.70 S1 = RM2.40 S2 = RM2.14
- Resistance: IR = RM3.08 R1 = RM3.45 R2 = RM3.71

Short Term Trading Idea: L&G - A Likely Breakout Signal For Further Technical Rebound Bargain Buy
- Strategy: Bargain Buy near RM0.50 for further upside ahead.
- Target: IR = RM0.56 R1 = RM0.635 R2 = RM0.725
- Support: IS = RM0.50 S1 = RM0.425 S2 = RM0.36
- Exit: Cut loss if it falls below the 40-day SMA near RM0.48

Important Dates

Company Entitlement details Ex-date Payment date

New entitlements
Malaysia Building Society First and final dividend of 4% less 25% tax 4-May-10 27-May-10
Kian Joo Can Factory Final dividend of 2.5 sen less 25% tax 5-May-10 18-May-10
Box-Pak (M) First and final dividend of 7 sen less 25% tax 5-May-10 18-May-10
Poh Huat Resources First and final dividend of 2% less tax 6-May-10 21-May-10
Mudajaya Group Final dividend of 2 sen single tier 9-Jun-10 6-Jul-10

Going “ex” on 8 Apr

Halex Holdings Final single tier dividend of 3 sen 8-Apr-10 19-Apr-10
Scomi Engineering Interim tax exempt dividend of 5 sen 8-Apr-10 10-May-10

...For more details, see individual reports attached

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